Indian authorities this week arrested Janardhana Reddy, a former government minister and a billionaire mining magnate from the southern state of Karnataka, on charges of illegal iron-ore mining.Investigators say they recovered \"incriminating documents\" - along with US$1 million (Dh3.67m) of cash, 30 kg of gold, a Rolls-Royce Phantom and a helicopter - after raiding his properties in Bellary, a district endowed with rich deposits of iron ore exported around the world.In a scathing report released in July, N Santosh Hegde, a former supreme court judge who spent more than two years investigating alleged illegal mining in the region, accused Mr Reddy of running a \"mafia-like\" empire, controlling Bellary like a personal fiefdom, and inventing a nefarious financial system to avoid paying mining royalties to the government - so far resulting in a revenue loss of $3.5 billion to the state exchequer. Mr Reddy, 44, who is well known for his extravagant lifestyle - he once donated a 400m rupee (Dh31.7m) tiara festooned with diamonds to a Hindu temple - has consistently denied any wrongdoing.But his arrest, observers say, reflects the Indian government\'s toughening stance on alleged illegal mining around the country. Mining scams are cumulatively bigger than last year\'s $40bn 2G mobile phone spectrum scandal, in which a government minister was accused of selling mobile frequencies at throwaway prices to companies he favoured.India loses hundreds of millions of dollars every year to rampant plundering of the country\'s vast mineral wealth. The flourishing mining industry is worth $34bn a year, according to the latest India Mining Report, a privately published survey.It is expected to touch $45bn in the next two years. The country is endowed with 86 minerals, according to the ministry of mining, which in recent years have attracted global mining magnates such as South Korea\'s Posco and the London-listed Vedanta. India is the world\'s third-largest producer of coal and bauxite, the fourth-largest producer of iron ore and the fifth-largest producer of manganese. With 8,700 operating mines in the country, minerals form 16 per cent of India\'s exports, generating employment for more than 1.1 million people. But the government estimates there are 15,000 mines operating across the country without the required approvals and licences. The state government of Karnataka says that between 2003 and last yearmore than 30 million tonnes of iron ore has been illegally exported from the state, largely out of Bellary. Illegal mining surged largely on account of growing demand for iron ore from China - where prices of the mineral tripled between 2000 and 2008.A so-called mines and minerals development and regulationbill seeks to set up a task force to take on illegal mineral extraction and transportation. Fifty special fast-track courts are being set up to handle the cases.