The Dutch Disease

THE DUTCH DISEASE

Ajit Chaudhuri – June 2022

Safety is not a metric, it is a value!

 

Joining a large, old, well-established and highly successful organization, as I did this March, is not easy – especially when it is towards the fag end of one’s career. The bureaucracy is mind-boggling in its complexity, and simple tasks require oodles of patience and perseverance, a very thick skin, and a sense of humor. There is little separation of work from personal life in a town in which one is recognized as an officer of the organization wherever one goes, and therefore little scope for, forget about cocaine-inspired episodes with underage prostitutes or drunken bar fights with the local peasantry, even stuff like running a traffic light or making a reference to the virtue of someone’s female relatives in conversation. And as for the observation of hierarchies in every act and conversation, including referring to others in terms indicating either knighthood or ownership of a brothel, depending upon gender, the less said the better.

And yet, I feel like a fish in water!

A reason for this is the opportunity to roam around in small and remote mining locations scattered across the Eastern Ghats, and to meet the communities that reside alongside and are affected by its operations. This note is about one such location – the iron ore mines at Noamundi and Katamati on the Jharkhand – Odisha border.

Noamundi is a beautiful 130 km drive from Jamshedpur, with an excellent road that meanders its way through forests, meadows, rice fields, the occasional village haat with fresh vegetables and locally brewed hooch on prominent display, and small towns such as Chaibasa and Jagannathpur. Much of it is a company township, with residential areas, a club, offices, a shopping area, workshops and all, and then there is the mine itself – a high grade iron ore mine that feeds steel plants in India and abroad.

The area was verdant forest until, about a century ago, the soil was found to contain iron ore in abundant quantities. And then, the laws of Mammon took over. The tribal communities that occupied the land were shunted out, the forest was cut down, and open cast mining began. Mining involves – taking over a large tract of land; ridding it of its occupants and stripping it of its forest cover; drilling into the land; blasting the soil; organizing the soil pile and loading it onto a dumper; transporting the soil/ore to a plant where it is sorted and cleaned; and then transporting to a loading station where it is put onto railway wagons or trucks that move it to a port or to a steel plant. It’s not pretty – it involves displacing communities, cutting trees, raping the earth, running trucks day and night to move material (and dealing with the offshoots of this, including increased liquor consumption, more accidents, noise pollution, a rise in prostitution), et al.

And yet, what are the alternatives? Economic growth is recognized as the best way out of poverty – 10% growth in gross domestic product per capita every year results in average income doubling in 7 years, and 14% in 5, and average income doubling for a large country is huge even if the likes of Adani and Ambani disproportionately benefit. Such a pace of growth requires abundant quantities of raw materials, minerals and metals, energy, and so on, without the option of colonialism to obtain them that was available to countries that industrialized earlier, who were able to pass on the negative externalities of high growth on to others. And, in the process, some people get screwed – it is not possible to make steel without mining (which involves all that is described in the previous paragraph) and without running a blast furnace (air pollution plus generous contributions to global warming), it is not possible to run chemical plants without polluting, or to produce power without displacing – not in the quantities that a 10% plus per capita growth rate requires. And, no matter how much the world progresses, irrespective of new laws on land acquisition that favor land losers, business responsibility standards that recognize environmental and social factors, and woke corporate bosses (mostly from the IT sector, which does little direct displacing, extracting or polluting) spouting claims about people being stakeholders, a community continues to be in deep shit if anything worth mining is found in its vicinity, anywhere in the world. Dutch disease, the term for the negative consequences of natural resource discovery for an area and its resident communities, is an inevitable outcome.

 

The mining area stands in sharp contrast to the verdant forest that is behind it. I visited with my colleagues Tulsidas Ganvir, the boss of our work in Noamundi, and Mohit Gandhi, a young management trainee attached to us for a short duration.

Some outcomes, though, are not unmitigated disasters. One originated from a decision to train women to drive dumper trucks in the mine, the 100-tonners pictured below that transport the ore to the plant. The first batch of 22 were difficult to find, and required much outreach within the communities in the vicinity of the mine. But they have proved such a success (apparently they actually observe safety rules, respect speed limits, AND do not constantly require smoking breaks) that their numbers are being increased, and this time around a mere announcement of vacancies got applicants. And now, many girls who had dropped out of education are returning to school to complete class 10, the minimum educational qualification for a driver, with the ambition of getting jobs as dumper drivers. The law of unintended consequences playing itself out to advantage!

 

My colleagues and I posing with a 100-tonner Komatsu in the mine.

All very nice, some of you may be wondering, but surely time hangs a little heavily in the place. And, for its residents, I have no doubt that it does! But, as a short term visitor, I managed to keep myself reasonably occupied. On one occasion, I managed to wangle an invite to dinner at a home in one of the local villages, and sat on a charpoy in the open, took in the evening air and the surrounding jungle, imbibed homemade hooch aka haandiya and followed it up with home-cooked desi chicken, rice and chutney – no restaurant could compare. On another, I was asked to attend a function to inaugurate a local community hall – I demurred on the assumption that it would be full of politicos and their speeches and was told, don’t worry, it is being organized by the local adivasi association (and not the company) and that therefore there will be less talk and more festivity. The picture below is evidence that I was persuaded to change my mind.