At the heart of the Bailadila Hills in central India lie 1.1 billion tons of raw ore so pure and plentiful that half a century after miners first hacked at it with pickaxes, it remains the richest, and one of the largest, iron deposits on the planet.
Essar Steel Ltd. built a plant near the hills in 2005 to turn the ore into a liquid. The Mumbai-based company, controlled by billionaire brothers Ravi and Shashi Ruia, added a 267- kilometer pipeline to pump the slurry to the east coast, where Essar makes steel.
Yet on this quiet June day, cobwebs hang on rusted pipes in the all-but-abandoned facility, Bloomberg Markets magazine reports in its September 2010 issue. Caretakers prepare to switch truck-size rock crushers out of their coma, rousing the machines for five minutes a month to ensure they still work.
Maoist rebels from the surrounding Dandakaranya forest armed with guns and explosives -- and some wielding axes and bows and arrows -- attacked the facility four times in little more than a year, officials at the now-mothballed plant say. They burned 54 trucks waiting at factory gates in April 2008 and damaged part of the slurry pipeline, the world’s second longest, in June 2009. Essar idled the plant that month.
‘Sucked Into the Conflict’
“The Maoists are gaining ground, and India’s resource crunch will only get deeper,” says Suhas Chakma, director of the New Delhi-based Asian Centre for Human Rights. “The entire economic development of the country is being sucked into the conflict.”
Half hidden even to Indians, some 10,000 Maoists fighting over stretches of mineral-laden land hold a Portugal-sized swath of India known as the Red Corridor in their grip. From an area they call the Dandakaranya Regional Zone and neighboring forests, the rebels run their own schools and clinics, print their own books, fly their own flags -- and are stepping up their attacks.
Maoist-related violence killed a record 998 people last year as assaults on economic targets reached an all-time high, according to Ministry of Home Affairs data.
A Mumbai-bound train derailed in May, killing at least 146 people, after what police suspect was sabotage by a Maoist group. More than 200 security officers died in attacks in the first six months of 2010.
‘Long, Bloody War’
“We do not have the forces to move into areas occupied by the rebels,” Home Secretary Gopal K. Pillai told India’s Institute for Defence Studies and Analyses in March, according to media reports. “We have a long, bloody war ahead. It is going to be a long haul, and I see violence going to go up.” Pillai declined to comment for this story.
Home Minister Palaniappan Chidambaram told chief ministers of Maoist-hit states on July 14 that the federal government will strengthen security forces and provide better roads, schools and health care in areas where Maoists operate. Maoists have some degree of influence in 220 of the nation’s 626 districts, the government estimates.
India’s failure to defuse the conflict is another setback as it struggles to become a Western-style power. The nation must spend $1 trillion to improve living standards and infrastructure from 2012 to 2017 for its $1.2 trillion economy to grow at close to 10 percent, Prime Minister Manmohan Singh said on March 23. Growth has averaged 8.5 percent a year in the past five years.
Even with technology parks for International Business Machines Corp. and Infosys Technologies Ltd.; brand-new airports in Bangalore, Hyderabad and New Delhi; and luxury malls for 300 million middle-class consumers, stretches of India remain mired in poverty. Thirty-seven percent of its 1.1 billion people live on less than $1.50 a day, the government says. Life-expectancy and child-malnourishment rates rival those of sub-Saharan Africa.
Violence in the Red Corridor has left local populations -- many of them tribal peoples -- even further behind.
Maoist activity in seven eastern and central states is threatening at least $78 billion in natural-resource projects, brokerage CLSA Asia-Pacific Markets estimates. Beneath this region lies the ore in the Bailadila mines; 40 billion of India’s 46 billion tons of proven coal reserves; bauxite for aluminum; tin; and even diamonds. India’s expansion -- and its attempt to catch up to China in industrial prowess -- depends on unlocking this bounty.
“The growing Maoist insurgency over large swathes of the mineral-rich countryside could stall industrial-investment plans just when India needs to ramp up its industrial machine, just when foreign companies are joining the party,” a nine-person committee of the Federation of Indian Chambers of Commerce and Industry said in November.
India’s Maoists, called Naxalites, take their name from a group of villages known as Naxalbari in east India where farmers revolted to gain land ownership in 1967. China, then in the throes of Mao Zedong’s Cultural Revolution, praised the uprising in the “People’s Daily.”
“The Indian revolution must take the road of relying on the peasants, establishing base areas in the countryside, persisting in protracted armed struggle and using the countryside to encircle and finally capture the cities,” the Communist mouthpiece said on July 5, 1967.
Armed with rifles stolen from police and explosives pilfered from mining companies, the Naxalites are following that advice as they plot a collective state run by farmers and landowners.
“Try and understand, sir: What we want is a total eradication of the Indian government,” a man who says he’s involved with the Naxalites’ political wing said in a May interview with Bloomberg Markets in Jharkhand state. “A total eradication of the multinationals,” continued the man, who declined to have his name printed because he says he’s wanted by police. “Only then can we build a new society.”
Leaders of the now-banned Communist Party of India (Maoist) agreed on a time line and targets for their revolution at a February 2007 meeting in a Jharkhand teak and bamboo forest so dense that it has never been fully mapped, according to two officials in Indian foreign intelligence agency Research and Analysis Wing and the April 2007 Maoist newsletter “People’s March.”
Solar panels powered their laptops and a diesel generator fed a photocopier, dragged in on mules, according to the newsletter and photographs that intelligence officials reviewed from computers captured in later raids.
The Maoist leaders put top steelmakers on their hit list. Today, Essar; ArcelorMittal, run by billionaire Lakshmi Mittal; JSW Steel Ltd. and Tata Steel Ltd., both based in Mumbai; and Pohang, South Korea-based Posco have made little headway on planned projects in India’s mineral belt.
Delays in acquiring land have hurt ventures that could help double the country’s steel production to 110 million tons a year, Steel Minister Virbhadra Singh said on Dec. 10.
ArcelorMittal, based in Luxembourg, wants to build a $10 billion plant in Jharkhand and another in the east coast state of Orissa. Local farmers, some of them coached by the Maoists, refuse to move to accommodate the world’s largest steelmaker. The company declined to comment for this story.
“Naxalism has emerged as the biggest single internal security challenge,” Prime Minister Singh said at a New Delhi press conference on the first anniversary of his second term in May. “Controlling Naxalism is very necessary for the country’s progress,” he added.
Deadly Train Sabotage
Singh’s warning played out with deadly consequences four days later. As the Gyaneshwari Express sped toward the financial capital of Mumbai on May 28, the train derailed after hitting track police suspect a Maoist-backed group called People’s Committee Against Police Atrocities had sabotaged. The express rammed into a cargo train.
Almost 15 hours after the crash, workers were still using chain saws to reach survivors. A child’s red shirt lay strewn across engine controls. A red suitcase had burst open, leaving clothes spilled and chocolate cookies rotting in the heat. Authorities arrested four group members on July 1; a trial date hasn’t been set.
About 400 miles (644 kilometers) away, Naxalites ambushed a 70-person security team as it cleared roads of improvised explosive devices, killing 26 on June 29. Rebels had assaulted a similar patrol in April, killing 76 soldiers in the worst such attack in the uprising’s almost 43 years.
“The Maoists think the best way to create disorder, confusion, terror and discredit the government is to target civilians,” says Kalim Bahadur, former professor of South Asian Studies at Jawaharlal Nehru University in New Delhi. “The objective is to create fear.”
The Naxalites are winning the trust of some farmers as companies and states try to commandeer land for industry. From 2001 to 2007, 1.4 million residents were displaced in four states after their property was taken under India’s equivalent of eminent domain laws, the Ministry of Rural Development estimated in 2008.
Ninety percent said they’d gotten too little compensation, according to the Indian Social Institute, which aids minorities. Naxalites argue that in the height of economic bounty, India is ignoring its neediest.
“There is no ready, quick fix,” says Walter Rossini, who helps manage $1.2 billion in emerging-market stocks, including Tata Steel, at Milan-based Aletti Gestielle SGR SpA. “The Tata Group knows the situation very well -- and the risk -- but the region is very rich in natural resources. If you wait, the opportunity may not last forever.”
Tata Steel plans plants in Chhattisgarh, Jharkhand and Orissa states. In Chhattisgarh, Tata says, 70 percent of the affected families have accepted the offer of up to $4,200 per acre -- at least twice the market rate -- a small plot for a house and the possibility that Tata would provide land elsewhere and a job with the company.
“There are a minuscule percentage of hard-core families having extreme left-wing connections who are delaying the process,” spokesman Sanjay Choudhry says.
In West Bengal state, JSW paid about $6,400 an acre. It threw in another $6,400 in company shares. Near Delhi, Reliance Industries Ltd. paid as much as $46,000 an acre in 2007.
Posco, Asia’s most profitable steelmaker, has gotten nowhere with its proposed 26,000-acre (10,520-hectare) Orissa steel plant and port. Villagers have rejected all offers and erected barricades around their land, scuffling with police and Posco officials.
‘Living Like a Slave’
“Why should they move?” says Abhay Sahoo, a communist leader who has led protests against Posco. “The farmer may not be living like a king, but without his land, he will be living like a slave.”
The violence stretches back to the years after India’s independence from Britain in 1947. Communist parties pledged to distribute land to farmers, an initiative that stalled in the 1950s.
After the 1967 revolt, the Maoists failed to spread into Kolkata, then called Calcutta. Leaders started local uprisings in Andhra Pradesh and Kerala states. By the late 1990s, the Andhra Pradesh government had chased the fighters into the Chhattisgarh and Jharkhand forests, where they started fresh, says Aditya Swaroop, cabinet and principal secretary for Jharkhand.
The Maoists began re-emerging around 2003. The Chhattisgarh state government launched the Salwa Judum, or Purification Hunt, paying villagers $40 a month to fight the rebels and help force people off their land for companies, says Chakma of the Asian Centre for Human Rights.
“With the active support of government security forces, Salwa Judum members conducted violent raids on hundreds of villages suspected of being pro-Naxalite,” a 2008 study by Human Rights Watch found.
The state evicted people from at least 640 villages to make way for proposed Essar and Tata factories, according to a March 2009 draft report by the Ministry of Rural Development. About 350,000 villagers were displaced, “their womenfolk raped, their daughters killed and their youth maimed,” the report said. Those who didn’t escape into the jungle were herded into refugee camps, where some 60,000 still live.
A later report, dated December 2009, drops references to forceable displacement and assaults as well as references to Essar and Tata. The ministry didn’t respond to requests to comment on either report. Essar says it had no connection to the Salwa Judum; Tata noted that the final report had removed the allegations.
Six-hundred Maoist rebels slipped out the Dandakaranya forest and swarmed state-controlled National Mineral & Development Corp.’s iron ore facility, not far from Essar’s plant, in February 2006.
They hijacked a vehicle delivering food and killed nine policemen, according to a report by the Central Reserve Police Force, or CRPF, a paramilitary agency. They carried off 20 tons of ammonium nitrate explosives, loading boxes onto wooden stretchers for the trek back into the forest.
The next year, the CPI (Maoist) met for the first time in 30 years for the Ninth Congress, as members called the strategy session deep in the forest. Government helicopters buzzed overhead, too high to spot the gathering, while villagers and an indigenous population faithful to the rebels kept watch, the man who spoke to Bloomberg in Jharkhand says.
“I call upon the people of India to come forward in large numbers and support this embryonic people’s war and protect India from the greed of the Mittals, Tatas, Ruias and (unintelligible),” Muppala Lakshana Rao, general secretary of the CPI (Maoist) told the crowd, according to a transcript created from a video of his speech. “Indians, rise up as a tide to smash imperialism.”
In Jharkhand, the man remembers the Ninth Congress and smiles.
“It was a glorious event in our history,” says the man, who recalls trekking three days into the forest to reach the gathering.
A four-hour drive from Ranchi, the capital of Jharkhand, some villagers welcome today’s Maoists. The road ends before it reaches the home of Laxmi, a tribal beer brewer and, as such, among the lowest castes in India’s hierarchy. Laxmi, an emaciated man with yellowing teeth who asks to be identified by one name, says his 15-year-old son ran away to join the Naxalites, and he can’t blame him.
“The more my son read books, the angrier he got at how poor we were,” he says.
Laxmi says he has seen a doctor once in his life, when his family loaded him onto a passing bus to get a cast on his broken arm. A dilapidated health clinic with a clipboard in a desk drawer lists the last nurse visit: October 1998. Today, women use the building to defecate away from public view.
Prime Minister Singh says families like Laxmi’s make obvious targets for Naxal recruitment.
“These areas have lagged behind the rest of the country,” Singh told ministers of Naxal-affected states, according to a July 14 transcript. “For far too long have our tribal brothers and sisters seen the administration in the form of a rapacious forest guard, a brutal policeman.”
Singh’s government has deployed about 47 CRPF battalions -- some 50,000 troops -- and 10 battalions of an elite force called Commando Battalion for Resolute Action to Chhattisgarh, Jharkhand and three neighboring states.
Bansi Kumar Ponwar, a former army brigadier who fought insurgencies on India’s borders with China and Pakistan, is training security forces in Kanker, less than 100 kilometers from the Dandakaranya forest.
Counter Terrorism College
Officers spend 45 days on jungle survival, speed marching and rappelling from helicopters at his Counter Terrorism and Jungle Warfare College. Then they leave for their regular police or CRPF units.
Ponwar chose Kanker because its hilly, tree-covered terrain is like Maoist strongholds.
“Isn’t it funny that right in the heart of India, there’s an entire region where normal people like you and I just can’t walk in?” he says. “You will be killed, or kidnapped or questioned by some authority other than Indian police. It’s become a kind of liberated zone.”
Such entirely rebel-run territories are key to Maoist plans, according to their training manuals. The CRPF estimates 1,500 to 2,000 guerillas come to the forests each year to learn modern weaponry, and children as young as 16 are trained in AK- 47s and rocket launchers. In April 2005, November 2006 and March 2007, Maoists attacked two armories and a police station, killing 55 people and carrying off 730 rifles and 28,000 rounds of ammunition.
‘Safeguard Your Weapons’
“Safeguard your weapons like your life,” reads page 52 of a 200-page manual the CRPF took from a village in 2008. “The enemy must be finished, his weapons seized and he must be made powerless.”
The few people who have been invited into these rebel-run zones, such as Booker Prize-winning author Arundhati Roy, describe places devoid of formal Indian presence. They portray an egalitarian society where people live in balance with the untouched forests.
The Maoists carry printing presses on horses or mules to distribute news from Indian, Nepali and South American communists, according to the man in Jharkhand and propaganda manuals reviewed by Bloomberg Markets.
‘A Red Salute’
In one instance documented by the CRPF, four Maoists used laptops to tap into a mobile phone tower near the Dandakaranya forest, sending mass text messages declaring their presence. Mostly, they communicate by notes in the regional Telugu language carried by children. The young messengers hide the letters, known as biscuits, folded into small squares in their mouths. Some read like poetry.
“A red salute to our red brothers,” says a redacted version seen by Bloomberg Markets. “There is beauty in the rains and also strength.” Intelligence officials interpret the latter sentence as a signal to lie low until the monsoons end.
CRPF Special Director General for Left Wing Extremism Vijay Raman looks over three-dimensional maps on June 12 created from satellite data gathered by the Indian Space Research Organisation. Then he plans an attack on a suspected Maoist gathering in Jharkhand. The offensive will claim 10 Maoists, but Raman says military action isn’t the answer.
‘These People Are Indians’
“I really would be the last person to open fire on them,” he says. Instead, the government must supply electricity, schools and roads. “Ultimately, fundamentally, these people are Indians,” he says. “The only solution is to reach out to these populations.”
Until then, the rebels may count on villagers like Laxmi, for whom they act as a surrogate government.
“The Maoists think of themselves as Robin Hood types, but they harm innocent people,” Ponwar says. “Mr. Robin Hood needs to be reminded that this is not justice; this is jungle law.”
Ponwar ponders a deeper question: “How come the great Indian economic boom has bypassed these tribals?” he asks. “Bows and arrow, still, like in the 18th century.”
Laxmi’s town, with its mud huts and derelict clinic, shows what India is up against as it strives to unleash its industrial riches and become a world power.
The village lies near the site proposed for one of the two ArcelorMittal steel plants. Police and CRPF soldiers pass through weekly, to chat and establish routes.
At night, the Maoists make their rounds. Some, like Laxmi’s son, meet their families before heading back into the forest. Others gather information, discuss ideology and recruit volunteers, Laxmi says.
Then, in a sentiment that bodes ill for India’s aspirations, he adds, “If I were young and could carry a gun, I would join too.”