Media release - 14 March 2008 

 Media release - 14 March 2008 

Naxalites threaten mining industry

The Australian Government’s export credit agency EFIC reports that mining and mineral exploration in India faces a growing threat: Naxalites.

Many of India’s prime undeveloped mineral deposits lie in areas where these Maoist rebel guerrilla groups have their strongholds. The rebels have made a point of targeting mining interests.

Having grown in strength and cohesiveness in recent years, they now present a serious threat to the political order, EFIC senior economist Ben Ford says in the corporation’s latest World Risk Developments report.

“The rebels are taking advantage of discontent with industrialisation and uneven economic development to broaden their activities into urban areas and regional politics. This could hinder the government’s ambitious plans to expand mining and heavy industry,” he says.

Attacks have taken place in the resource rich provinces of Orissa, Andhra Pradesh and Jharkhand. A recent attack on a police armoury in Orissa left 18 dead with the rebels stealing a large cache of weapons and ammunition.

“Prime Minister Manmohan Singh in his 2006 Independence Day speech identified Naxalites and terrorists as the two main internal threats facing India.  Naxalite attacks claimed 160 lives last year - more than any other form of political violence in India,” Mr Ford comments.

The Naxalites are engaged in a violent struggle against what they regard as social injustice and economic inequality. They are tapping growing rural resentment of the increasingly visible wealth divide between city and country and concerns about rapid industrial development, especially plans to establish special economic zones.

The EFIC report also covers other risks to international mining companies elsewhere in the world, particularly artisanal gold diggers in Ghana, power shortages in South Africa, resetting of licence terms in the Congo (Dem Rep), and nationalisation in Zimbabwe.