Transforming the Indian Mining Sector: Mitigating Environmental Impacts through ESG Initiatives

Mining is a fundamental component of economic growth as it provides the essential raw materials for industries, creating a symbiotic relationship between the industrial sector and economic development. Minerals and metals extracted from the earth contribute to nearly every facet of development. Buildings, manufacturing sector, power generation, and technology are some of the major areas reaping off the resources extracted from the mining sector.

India’s economy is dependent on its mining sector to a huge extent. It is responsible for providing employment opportunities along with industrial growth and energy security. However, the rapid expansion of this industry has also led to instances of negative environmental impact. Some of these impacts include deforestation, soil erosion and increased possibilities of floods, eventually culminating into a range of environmental disasters. This is specifically worse for ecologically sensitive areas. They are also accompanied by varied forms of human rights violations and health risks leading to humanitarian disasters.

These incidents have led to the requirement of incorporating the practices of sustainable management phenomenon in this sector as well. The implementation of Environmental, Social and Governance (ESG) regulations in this sector is a dire need, necessary for minimizing the adverse environmental impacts. It is essential for India to analyze the relevant ESG frameworks and implement them in a manner which harmonizes ecological conservation with development.

Mining in India

In India, mineral mining has a long history, which can be traced back to the Harappan civilisation. The development of India’s mining industry is fueled by the country's abundant reserves of rich and diverse minerals. The nation has abundant resources of both metallic and non-metallic minerals. The amount and value of mineral production have increased significantly since the country gained its independence. Approximately 95 different types of minerals are produced in India, including fuel, metallic, non-metallic, atomic, and minor minerals. The nation is among the top five producers in the world of minerals and metals like iron, zinc, and bauxite ore. As a result, the mining sector has turned out to be crucial for the nation’s economy.

When these resources are used properly, along with the existing cutting-edge machinery and strategic planning, the industry has the potential to improve India’s economic standing significantly. The mining industry as of now contributes 2.2% to 2.5% of the GDP, which proves its economic significance. It also presents opportunities for infrastructural growth, employment, and prosperity. However, they also pose significant risks to local communities, including instances of environmental degradation and displacement. The obligation naturally falls on the centre and the state governments respectively, who are the ones in control of the minerals located within their geographical boundaries.

The Environmental Impacts of Mining in India

India has reaped substantial economic benefits from mining, particularly in mineral-rich areas like Jharkhand, Odisha, Chhattisgarh, and Goa. But these benefits are obviously incurred at a cost, which can be observed through the instances of extensive environmental deterioration. They are silently taking a toll on the environment and the lives of the citizens.

Key environmental impacts of mining include deforestation, soil erosion, and water contamination, all of which exacerbate flood risks by reducing ecosystems’ ability to manage excess water. The loss of forest cover, particularly for coal and open-pit mining, decreases ecosystems’ capacity to absorb excess precipitation and upsets natural water cycles, increasing surface runoff and the danger of flooding.

The Uttarakhand town of Kotdwar saw terrible floods in July and August of 2023 that severely damaged homes and infrastructure. The heavy rainfall, combined with illegal sand mining which destabilizes riverbeds, amplified the damage caused by overflowing rivers like the Khoh, Sukhro, Malan, and Paniyali. The situation was further exacerbated by the heavy rainfall which served as a complementary factor. There were instances of bridge breakage, which resulted in the Uttarakhand High Court issuing an order in 2023 which prohibited illegal mining activities in the area.

There have been similar incidents in other parts of the nation as well. Himachal Pradesh also faced catastrophic floods due to illegal sand mining near rivers like Beas. In 2024, farmers living around the Yamuna River had expressed concerns regarding the onset of monsoon and the potential impact of the uncontrolled mining activities. Crops, houses, and livelihoods of people are exposed to danger due to the poorly regulated mining activities, which have continued despite all of its adverse impacts. Naturally, this has led to a state of perpetual fear among people living near mining zones.

There are states like Goa, Nagaland and Meghalaya which have imposed a ban on mining different minerals.  Goa imposed a complete ban on iron ore mining in 2012 and 2018, owing to the impact on the environment. However, the  ban led to a vast extent of financial distress for those who were involved in the sector, right from the truckers to those who owned the ores. There were multiple instances of outrage by the stakeholders and it affected the economy of the state.  In fact, in 2024 when the Anil Agarwal-led Vedanta, resumed mining operations, it was estimated that the resumption would bring back the state’s economy back to status quo. These instances are a testament to the fact that a complete ban on mining is not the apt solution to these problems, rather alternative solutions which make the industry more sustainable are necessary.

ESG Initiatives: A Solution to Environmental Risks in India

The global mining sector is under tremendous pressure to align its operational strategies with the Sustainable development goals. Naturally, India has also been facing calls for incorporating sustainability principles in the mining sector.  These requirements establish that it is necessary to balance economic growth with environmental and social responsibility. More precisely, they ensure that mining and resource utilization are managed in a way that minimizes the negative effects on nearby ecosystems and reduces the extent of greenhouse emissions. They also focus on ensuring that the operations have no negative social or economic effects on the surrounding community.

Initiatives like “Make in India”, “Aatmanirbhar Bharat” have slowly been pushing India to maximize the utilization of its domestic reserves. India’s commitment to boost coal production over 1 billion tonnes by 2024-25 is a reflection of the extent of this objective. The intention is to ensure its presence in the global market through minerals like coal and iron ore. The booming construction sector has also amplified the need for minerals. There have been a few energy alternatives introduced in the market, but they will take significant time to develop.

However, these initiatives have also led to the shift towards the requirement of more quality driven, time efficient equipments which also result in a comparatively lesser impact on the environment.  Decarbonizing electric supply, adopting cleaner fuels, electrifying equipment are few of such modifications which are paving a pathway for the sustainable goals. TATA steel has in fact shifted to cleaner fuels, which would reduce the greenhouse gas emissions to 968 tonnes. Miners are also being pushed to beyond compliance and net zero objectives, ensuring a holistic approach to ESG objectives. Biofuel usage, adoption of green hydrogen are few of the other initiatives traversing the path to the sustainable development goals.

But, these initiatives still have a long way to go with a major scope for development. Mining industry in the world has created varied forms of toolkits and guidance on environmental, social, and governance (ESG) principles to ensure mining responsibly. Organizations like the International Council on Mining and Metals  have also provided business-based initiatives that can offer practical tools for mining companies in their adoption of ethical and environmentally friendly practices. These resources highlight the pathway to attain the three key objectives: positive societal impacts, environment conservation, and economic progress.

India must adopt the aforementioned international best mining practices to ensure sustainable operations that prioritize environmental preservation and community welfare. Robust ESG policies can mitigate risks, protect local communities, and strengthen India’s long-term economic resilience. Policy initiatives like the National Mineral Policy 2019 and the Sustainable Development Framework (SDF) have advanced India toward sustainable mining, emphasizing transparency, environmental protection, and social equity. India aims to achieve a 30-40% reduction in its mining-related carbon footprint through sustainable initiatives by the year 2030. This can only be achieved if the stakeholders of the industry are ready to revamp it.