A few years ago, a story appeared in the Indian press that a massive scam involving the illegal mining and covert export of thorium was taking place in the southern Indian state of Tamil Nadu. Then two things happened: one, the story died out quickly without anyone investigating it further (but repeating the allegations over and over again), and two, many just assumed it was true. Given the opacity of the Indian state, particularly in matters involving nuclear materials, there is a tendency for suspicions to become allegations and allegations to become guilty verdicts. In an era of scams, government denials made little difference to the public discourse.

In a scam-studded decade of Congress rule, the public has reached scam fatigue and numbers as stratospheric as Rs. 60 lakh crores, the amount the thorium scam is supposed to have embezzled, are out of the comprehension of the common man. Two other numbers offered in terms of the scale of embezzlement are Rs. 48 lakh crores and a more reasonable Rs. 96,000 crores. Yet an alleged scam of such value, not just pecuniary but also strategic, is worth reconsideration.

The beach sands of Tamil Nadu and Kerala are rich in several heavy minerals such as ilmenite, rutile, leucoxene, garnet, sillimanite, zircon and monazite. These minerals are used in several industries from steel and electronics to jewelry and ceramics. Monazite, however, contains thorium a nuclear fuel of much interest. Discovered in the 1880s, monazite was the primary source of commercial lanthanides. India and Brazil dominated the market until World War II but with the commercial viability of bastnäsite – a rare earth mineral with lower thorium content than monazite – in the mid-1960s, interest in monazite waned. The export of monazite, used to procure nuclear cooperation from foreign states, was also banned by Prime Minister Jawaharlal Nehru in 1962.

It was illegal to mine these rare earth heavy minerals until recently; the only entity allowed to do so was the government-owned Indian Rare Earths Limited. In October 1998, the Government of India opened sand mining to private companies. This would be done on the basis of two licenses, one to mine the sand and another to handle nuclear materials. A further change in the law in January 2006 removed several of the minerals in the beach sands from the prescribed list and thus reduced the paperwork required to just one license to handle nuclear materials; private companies were now allowed to mine the sands for export of any mineral except monazite. The law retained thorium as a prescribed substance under the Atomic Energy Act and as a result, monazite remained off-limits to private entities.

However, the law also recognised that these minerals were mixed in the sand and therefore stipulated that companies handling the beach sand have to get a licence under the Atomic Energy (Radiation Protection) Rules from the Atomic Energy Regulatory Board. The company would have to either dispose of the monazite or store it on its premises as per regulations. The Indian government denied private companies the permission to process the monazite for thorium or to export the mineral: only IREL would be allowed to do that.

The thorium scam allegations make four claims: 1. a private company is exporting thorium-rich sand illegally; 2. between 2002 and 2012, some 2.1 million tonnes of monazite has gone missing, which amounts to approximately 235,000 tonnes of thorium; 3. the monazite has not been returned by the private company to the DAE after mining for other minerals; and 4. only a gentleman’s agreement requires the private company to inform the government about how much monazite they posses. The newspaper article makes no mention of the name of the company accused but the Indian Bureau of Mines reveals the company that matches the description provided – 96 of 111 garnet mining licenses and 44 licenses to mine ilmenite – to be VV Mineral.

The first claim is based on some circumstantial and anecdotal evidence that certain people were denied access to the beaches where the sand mining was taking place and to the warehouses where the monazite was stored. There could be two plausible reasons for this. The first is that private corporations do not let unauthorised people to access their facilities, be it the beaches or the warehouses, for reasons of safety and security. In fact, it may well be illegal for companies to do so without appropriate government clearances. A second reason could be that the facilities are under the jurisdiction of the AERB and only their authorisation can give visitors or inspectors access to premises storing nuclear materials. To an outsider, the plethora of government agencies that make up India’s nuclear conclave may be confusing and appear to be the same but each of them have distinct legal responsibilities.

The second accusation springs from a discrepancy between two reports by the Atomic Minerals Directorate For Exploration and Research of the Department of Atomic Energy. In a report read to the Lok Sabha in 2012, the AMDER stated that there were 10.7 tonnes of monazite on India’s beaches; in a similar report prepared in 2002, the AMDER had claimed 12.8 tonnes of the mineral to be present. This would indicate that 2.1 tonnes of monazite, or approximately 235,000 tonnes of thorium, had gone missing in the intervening period.

There is much reason for scepticism at these claims. Though India is estimated to have the second largest deposits of thorium after Brazil (different surveys show different results but all agree India is in the top three), the nuclear fuel is not exactly rare elsewhere in the world. Any international concern that wished to buy thorium can do so relatively easily on the open market without risk of running afoul of international and domestic laws. In this environment, it is difficult to envisage a situation in which anyone would wish to acquire thorium illegally.

Secondly, the amount of thorium that has allegedly been exported – 235,000 tonnes – is quite simply nonsensical. If India had 100% of its present energy output, about 200 GW, supplied entirely by thorium reactors, the amount alleged to have gone missing in the scam could power India at present rates for some 700 years. To give another example, the amount of thorium exported in the scam could power the entire world for 36 years! A final statistic to underscore the absurdity of the allegation is the annual consumption of thorium by the United States – four tonnes. With world consumption around ten tonnes, the amount exported from India illegally represents 23,500 years of global supplies. IREL itself exports barely five tonnes of monazite per annum.

Thorium cannot be used to make nuclear weapons either and so it even lacks the value of exotic contraband weaponry. Given the abundance of the mineral, it is also impossible for anyone to try and corner the market on thorium in anticipation of a surge in production of thorium reactors in the coming years. In conjunction with minuscule global thorium use, it is difficult to fathom whence the demand for such vast quantities of monazite comes.

The third allegation that the private companies have not returned any of the monazite to the government makes little sense either, for the law clearly stipulates that the mining company may store the monazite on its premises in full compliance of AERB regulations regarding the storage of prescribed substances. As of 2013, five private firms have been licensed to secure monazite on their premises.

The final accusation, that only a gentleman’s agreement exists between the companies and the government in reporting the companies’ monazite holdings, is not entirely out of the realm of impossibility in a country like India, famous for its bureaucratic lapses and inefficiency. However, the high priority given to the country’s nuclear assets makes this unlikely and any lapse is a result of a lackadaisical bureaucracy at most.

It is astonishing that an allegation based on such flimsy, uncorroborated evidence and numbers that bore no resemblance to reality received even the iota of attention that it did. Even the alleged cost to the exchequer, varying from Rs. 96,000 crores to Rs. 60 lakh crores – a 6,250% variance!! – should have set off some journalistic alarm bells. Perhaps the political environment of the times created a favourable disposition towards believing any ill of the government and reversed the country’s default position to an assumption of guilt rather than of innocence.

There remains, of course, the question about the missing 2.1 million tonnes of monazite. Is it in fact missing? Are the DAE’s figures accurate? If it has not been exported and is not missing, do the records show that amount in the holdings of the mining companies? If not, why not? Unlike the allegations against VV Mineral and the other four companies, these questions are merely about paperwork and should be asked of the DAE now that attention has been drawn to India’s beach sands.

Nonetheless, thorium holds great promise for India’s energy dreams. The Bharatiya Janata Party looks more and more certain to win the ongoing Lok Sabha elections and if they are to keep their manifesto promise to develop India’s thorium assets, it is time to dispel the dark cloud hanging over India’s fledgling thorium industry and give it the attention and support that it needs.

This post appeared on Daily News & Analysis on April 28, 2014.