The Lede Exclusive : US, German governments lobby for lifting of ban on illegal beach sand mining

India wavers, Tamil Nadu says a firm no, as evidence points to likely exports of thorium-rich minerals. 

(Originally published in The Lede on 02 Feb 2018
Link: http://thelede.co.in/lede-exclusive-us-german-governments-lobby-lifting-ban-illegal-beach-sand-mining/)

On October 24, 2017, a meeting took place in Delhi at the Union Ministry of Mines. This meeting was a crucial one. It would decide the fate of the illegal beach sand mining industry in Tamil Nadu and the stand to be taken by the Centre and the state government of Tamil Nadu before the Madras High Court.

Present were representatives of the Tamil Nadu government’s Geology and Mining Department, officials of the Union Ministry of Mines and the Department of Atomic Energy. Behind the scenes, a group of representatives of a private New York-based company called Barton Group along with US State Department representatives, were following the meeting minutely.

The Barton Group along with Germany’s AMPECO and Steag Power Minerals are some of the largest companies in the world that manufacture garnet abrasives, used extensively for industry as well as manufacture of weapons.

As the meeting was underway, the Union Ministry of Mines stand seemed to tilt in favour of beach sand miners of Tamil Nadu. Mining Ministry representatives wanted the ban on beach sand mining in Tamil Nadu to be lifted. The Americans wanted exactly the same. Late Chief Minister J Jayalalithaa had imposed a ban on mining and exports of beach sand in September 2013 and it is still in effect in the state.

The state government’s representative, a senior official, impressed upon the gathering firmly that Tamil Nadu would take action against the illegal beach sand miners and that the ban would not be lifted.

“The ‘top’ is yet to understand the magnitude,” said a source who was present at the meeting. “Probably they are not aware. We have clearly briefed them about the situation. The international companies need (raw) material. There is a representation to the Centre from the US and Germany.”

Sources at the Centre too confirmed to The Lede that the reason for the Centre’s vacillation, from the PMO downwards, was the unrelenting pressure from the US, German and Australian governments demanding that the ban on beach sand mining in Tamil Nadu be lifted in order to aid companies in their countries.

But why are the Americans and the Germans so interested in the remote southern coasts of Tamil Nadu? With the ban in place and finally being enforced, these foreign companies are feeling the pinch of supplies drying up. Supplies for firms like Barton and AMPECO come largely from Tamil Nadu – reportedly almost 80% of raw materials are exported from a few firms in the state. Raw materials are garnet, ilmenite, rutile, leucoxene, sillimanite and zircon, also called beach sand minerals or rare earth minerals, which occur naturally, mixed together in the coastal sands of Tirunelveli, Tuticorin and Kanyakumari. The beach sand mining industry is a virtual monopoly in the country, with VV Mineral owner S Vaikundarajan and his brothers having a stranglehold on mining and exports.

What The Governments Say

Email questionnaires were sent by The Lede to the US, German, Australian governments as well as various ministries in India. The Lede also wrote to The Barton Group and the German companies in question.

The questionnaire touched upon two key aspects – (a) whether these foreign governments were indeed lobbying for the lifting of the ban on beach sand mining in Tamil Nadu and (b) whether they were aware that the issue was pending before court and that reports by the Tamil Nadu government pointed to largescale illegal mining and exports of beach sand minerals.

Only the US and German governments responded via email to the questionnaire. A spokesperson at the US State Department wrote on 18 November 2017 – “We are unaware of any U.S. government officials participating in the Oct 24 meeting you describe. That said, U.S. Mission India routinely engages with Indian federal and regional counterparts to discuss U.S.-India business matters and advocate for U.S. companies, particularly in terms of supporting U.S. exports. Regarding beach sand minerals, we have urged that interested U.S. companies and Indian government officials meet to discuss ways to address the issue in a manner consistent with the laws and regulations governing that trade. We do not interfere with the Indian judicial system or directly involve ourselves in cases under consideration by the courts.”

The German government’s spokesperson wrote on 29 November 2017 – “The German diplomatic missions in India routinely assist German businesses and entrepreneurs in their communication with government authorities and ministries. It is correct, that a German company has been acquiring beach sand from Tamil Nadu in the past and has made representations to the government in this regard. As the matter of export licensing lies with the central government, representations have been made with the Ministry of Mines in New Delhi as well as the Department of Industry in Tamil Nadu. We understand, these representations were touching on the need to regulate the export of sand minerals in a transparent and efficient manner in the framework of the law.”

India’s Union Ministry of Mines, the Department of Atomic Energy, the Prime Minister’s Office, the National Security Advisor did not respond to email questionnaires or repeated phone calls on the subject.

As for the Tamil Nadu government, emails and phone calls to the Chief Minister’s office, the Chief Secretary, the Department of Geology and Mining as well as the Industries Department went unheeded.

The Hitch

The intense lobbying though comes at a time when a case is being heard by the Madras High Court on the same issue – an alleged Rs 2 lakh crore worth of beach sand minerals being illegally mined and exported, taken up by the court as a suo motu PIL in 2015.

In the past three years of hearings, a number of reports submitted by the state government as well as the Amicus Curiae have pointed to largescale illegality in mining and exports of these minerals.

Experts say that foreign influence and lobbying at such a crucial juncture could well work against India’s own interests.

“If there is a ban imposed on the export of certain beach sand minerals in that context, the government should refrain from lifting the ban especially when the matter is under adjudication before the court. The government should not allow itself to be swayed by lobbying by MNCs and their parent countries,” former Secretary to the Government of India, EAS Sarma told The Lede from Visakhapatnam.

Atomic Minerals Exported?

The lobbying and the Centre’s apparent buckling to foreign pressure is even more alarming when seen in light of new evidence that points to the possible illegal exports of thorium-rich monazite.

What is monazite – It is a naturally occurring atomic mineral that is found mixed into the sands of the southern coasts in varying concentrations. This mineral, when processed, yields thorium which can then be processed to yield uranium, both nuclear fuels. As a result it is of strategic importance to national security. Only government can mine and export monazite in India. Private miners cannot mine, process or export monazite.

The evidence that has raised questions over whether monazite has been exported illegally comes from the minutes of a meeting held on October 30 and 31, 2017. This meeting was headed by the Chairman of a Special Team appointed by the Madras High Court and submitted to court. The document points to the fact that out of 220 samples of beach sand analysed by the team, 53% (118 samples) had monazite content much higher than the allowed limit.

The findings of the Special Team show “…that many samples which are declared as Raw Sand contain concentration of Heavy Minerals upto 95%… Further a number of finished mineral stocks contain Monazite/Monazite equivalent much above the reference limit.”

Why is this worrisome? “Finished mineral stocks” are usually consignments meant for export.

The Department of Atomic Energy and the Atomic Minerals Directorate have ordered that export consignments of beach sand minerals that contain more than the standard measure of “0.25% monazite equivalent” of monazite, cannot leave Indian shores.

But “finished mineral stocks” have been found to contain monazite “much above” the prescribed limit. In effect, experts say this points to monazite being mixed in with other beach sand minerals and possibly, clandestinely exported in the past.

And this finding is worrying experts in the field. “Certainly, it should ring alarm bells for DAE, keeping in view the fact thorium contained in Monazite is going to be the long-term fuel option for India. India has significantly large deposits of monazite in its beach sands and DAE’s scientists have worked on developing the necessary technologies based on thorium fuel cycle for decades. The findings of the court-appointed Special Team are important in this context. I feel distressed that DAE has not responded to this in a meaningful manner till date,” said Sarma.

Govt Widens A Loophole

The Department of Atomic Energy, a portfolio held by the Prime Minister, had, in 2006-07, made life a lot easier for private companies that exported beach sand minerals.

On 18 April 2007, the DAE issued a note to the Atomic Minerals Directorate (AMD) stating that there was no longer any need to test for the presence of monazite in export consignments. The miners themselves could, if they so wished, test their own consignments for monazite content. What should have been a compulsory exercise to ensure that atomic minerals did not leave the country, became voluntary instead.

“It has been decided in the Department that AMD certification of export consignments of ilmenite may not be insisted upon as titanium ores and concentrates (ilmenite, rutile and leucoxene) and zirconium, its alloys and compounds and minerals/concentrates including zircon have been delisted from the list of Prescribed Substances after 1.1.2007 and moreover it is not justified on economic considerations. However, AMD may carry out the sample testing to issue the MTC as a charged service to be availed of on a voluntary basis, as at present no other agencies may be equipped to provide this service.” On 18 July 2007, a similar note was issued by the DAE for the mineral garnet.

As a result, since 2007, Central government agencies whose job was to ensure that atomic minerals did not leave the country, themselves decided to look the other way and “trust” the miners.

No testing for monazite content in export consignments since 2007. And the latest report shows monazite content “well above the prescribed limit” in “finished mineral stocks”. The questions arising from these two sets of facts are inevitable.

“One would have assumed that the DAE would make every effort to preserve monazite zealously from predatory mining and export,” EAS Sarma told The Lede. “Since monazite is an integral component of the beach sands and, unless close surveillance is exercised, it is easy for the miners to export monazite in the guise of the other atomic minerals, it is necessary that the DAE imposes stringent restrictions on the whole gamut of beach sand mining activity.

Contrary to this, DAE relaxed the restrictions on mining and export of atomic minerals in its controversial 2006 notification (became effective from 1-1-2007) and opened the floodgates to mining companies to exploit beach sands on a large scale. In the absence of a close scrutiny of the mining operations and stringent testing of the tailings from mining, large quantities of monazite seem to have already left the Indian shores in the guise of the other atomic minerals. More than the huge losses in terms of the revenues lost, this has far reaching strategic implications for the future of the Indian nuclear development programme… I hope that DAE revokes its 2006 notification and prohibits beach sand mining altogether,” he added.

The alarm bells are ringing across departments in the Centre and the state government of Tamil Nadu. With the lobbying by foreign governments now adding to the mix, the issue has gone all the way up to the Prime Minister, according to well-placed sources.

The email questionnaire sent by The Lede to foreign governments included a query on the possible export of monazite from India and whether those governments were aware of such a possibility. Only the US State Department responded to this specific query. “We take the transport of sensitive and controlled materials extremely seriously. The U.S. Government has strongly supported the strengthening of customs operations and border control efforts around the globe for many years, commensurate with the various nonproliferation regimes,” wrote a US State Department spokesperson.

The Centre Caves In?

The rushing in of the diplomats appears to be a last ditch effort at saving the beach sand miners who have allegedly continued to mine and export beach minerals despite the 2013 ban. The Tamil Nadu government’s Industries Department points out these attempts in an affidavit filed on October 10, 2017.

The affidavit states – “Instances of illegal mining of beach sand minerals in the coastal area and seizure of 4 vehicles” on August 11, 2016 at Karaichadhuputhur village in Radhapuram taluk of Tirunelveli district, in which a criminal case is pending at the Uvari police station. On December 07, another criminal case was registered “in Soolagiri Police Station for illegal transportation of ilmenite by Tvl. VV Mineral in a lorry bearing registration No. TN 52 B 7188.”

The affidavit goes on to record that more recently, a shipment of 420 MT of beach sand minerals meant for export from the Tuticorin Port was stopped. Investigations revealed that the company “VV Mineral have attempted to export 420 Metric Tonnes of Beach sand minerals by influencing the officials and obtaining a bogus certificate from the Assistant Director, Geology and Mining, Thoothukudi District and the foul play was found out by the Customs Authorities and after verification, the export… was prevented.” (emphasis in original document) The official involved was also suspended on March 21, 2017.

The state government’s affidavit also goes on to point out the attempted export of 3107 MT of beach sand minerals through the Cochin Port in late December 2016, which was again stopped, as the Port authorities asked for proof of legal source of mining. The company that attempted the export, VV Mineral, went to the Kerala High Court which has stayed the exports until the proceedings in the PIL of the Madras High Court are completed.

Another attempt made by the firm Beach Minerals Company to export beach sand minerals through the Vishakapatnam Port too was stopped in November 2017.

Despite mounting pressure from the Centre and foreign lobbies, the Tamil Nadu government insists action will be taken against the alleged illegal miners shortly. “In the light of the large scale violations and irregularities brought to the notice of the Government through the reports filed by the special team headed by Thiru. Gagandeep Singh Bedi IAS, and the status report filed by the Amicus Curiae on 20.06.2017, and the State is the owner of the minerals, the Government cannot allow such illegal activities to continue. The Government will take appropriate action in accordance with law after the filing of final reports before this Hon’ble Court on the illegalities in beach sand mining in the coastal districts,” states the affidavit filed on October 10, 2017 by the state Industries department before the Madras High Court.

A high level source in the Tamil Nadu bureaucracy confirmed the same. “We are very clear that we are going to take action soon. We have told the court the same.”

The miners, however, in various affidavits filed before the Madras High Court have denied any illegal mining and have stated that there are severe lapses on the part of the state government in preparing and analysing these reports.

What’s Next?

An unexpected turn of events has meant that the PIL itself is now stuck in court.

In November 2017, the PIL, which was being heard by the First Bench of the Madras High Court, transferred the case to a division bench of Justices Seshasayee and Sathyanarayana. Justice Sathyanarayana was subsequently transferred to the Madurai bench of the Madras High Court. Now the miners are in a quandary – since the Chief Justice has named both judges, they cannot move another bench for relief. One judge is in Madurai and the other in Chennai – it is not likely that this particular bench will sit together anytime soon, according to a number of lawyers arguing the case. Which means the desperate plea of the miners to allow exports is not likely to be granted anytime soon.

As the next round of hearings are awaited, a second round of sampling is currently being carried out to account for stored monazite in the premises of the miners. Monazite tailings which are produced as a result of the processing of beach sand must be stored underground as per rules specified by the DAE.

The first round of sampling which had been conducted late last year was binned, so to speak, as the miners had objected to their not getting samples. As a result, sampling is taking place once again, with one set of samples handed over to the AMD, one set with the court-ordered Special Team, one sample with the District Collector of the concerned district and the fourth with the miners. These samples will undergo chemical analysis by the AMD and the report would be submitted to the Madras High Court.

But the Bench coming together is key to all woes of the miners. No decision, in the case of the miners, is perhaps worst of all.

The Miner’s Response

The largest exporter in the country of beach sand minerals is VV Mineral and The Lede contacted its Managing Director S Vaikundarajan through email for a response to the issues highlighted in this report. Below are relevant excerpts from his reply.

All responses are reproduced as is from the email reply.

On foreign lobbies pressurising the Indian government to lift the ban on beach sand mining in Tamil Nadu: “The condense of the mail in which you requested response regarding lobbying by the US, German, Australian governments and participating of meeting by Barton and representation of Srinath Sridevan all the threes are new to us and we came to know this only from your mail. But I know that, you will write that Vaikundarajan is operating the said government and they are dancing according to my vim. Because only for that you are paid.” (sic)

On how his business has been impacted by the action of the Chief Justice’s transferring the PIL to a division bench and then transferring one of the judges to Madurai: “it is the order of the Honorable Chief Justice, if you have any query, you have to seek clarification from Honorable Court.”

On the state government’s firm stance that action will be taken against illegal beach sand miners: “yes the state government can take action against illegal miners.”

On his response to evidence indicating that thorium-rich monazite could have been exported to foreign countries in the past: “you yourself very well know that, all the ports have scanner facilities to find out the radioactive materials including monazite either transported even blended with other minerals and no such materials were transported till now. It is available in http://www.beachminerals.org/tuticorin-port-trust-has-scanner-to-find-out-radioactive-materials-uranium-thorium-monazite-or-other-unwanted-materials-used-for-export-until-now-no-such-materials-found-in-the-export-cargo-tutico/ . DAE also confirmed the same. But in India, you have the faith that, except Sandhya Ravishankar, Ravishankar all government machinery, officials and other functionaries are doing wrong even if they doing justice for VV Mineral. So we know that, you will write that the monazite are exported along with other minerals, as, you have getting money from our competitor only for that and your purpose is to prejudice the judiciary. My humble request while you publishing the article please put a word at least in small letter that “you have received remuneration from the concerned persons to publish to this”.” (sic)

The email ended with this statement – “We will take appropriate legal action as done earlier if false stories are published.”

(Note: There are two pending defamation cases initiated by VV Mineral against this journalist and one more defamation case initiated by this journalist against the company and its Managing Director)