'Rs 48,000 cr went into pockets of few mining companies' ------------------------------------------------------- INTERVIEW: Dr Claude Alvares Herald Review
Dr Claude Alvares, director of the action group Goa Foundation, has built a never-say-die reputation for taking up environment causes, spending much of the last 25 years in and out of the courts. In this exclusive and exhaustive interview with DEVIKA SEQUEIRA, his first since the Supreme Court banned mining in Goa after the non-profit filed a petition for action on the Shah Commission findings, Alvares delves into the complexity of the mining issue in Goa, the future of the industry, and what he thinks should be the way forward for the state which has relied so heavily on iron ore exports in the past. Given the public engagement with the mining debate, Herald Review is giving the interview as much space as possible Q: Post monsoon, it would be two years since the ban on iron ore mining in Goa came into effect. A recent Reuters report said the Goa ban and the clampdown on exports from Karnataka have cut the country's iron exports by 85 per cent -- or 100 million tonnes -- and have cost India more than $17 billion in foreign exchange earnings. What is the way out of the current impasse? ------------------------------------------------------------- The way out will come only with the judgement of the Supreme Court. The Expert Committee which is going to recommend the quantum of ore that could be removed on annual basis from Goa -- without damage to its environment or society -- would have submitted its report to the court on March 14. This report will be taken up by the apex court for consideration on March 24. Thereafter we expect that the court will issue its judgement, and only then will the situation become clear. Till that time all discussions are only speculations. Q: But isn't the export of iron ore a valid economic activity? Why do you favour a ban? ------------------------------------------------------------- India's exports were constantly overstated, as much of the mining in Karnataka, Orissa and Goa was illegal, and these exports should not have happened. However, Goa has not lost anything due to the stoppage, because the ore is still in the ground and is still worth that much. Or probably more. We can take it out whenever we want. Serious challenge to exports of ore has come from the Lok Sabha's Standing Committee on Coal and Steel in its report of August 2013. The committee has members from all parties, yet it has come to a unanimous conclusion that exports must be banned. The committee concluded that India has iron ore stocks to last only for 40 years based on usable reserves of 18 billion tonnes. If there is large scale growth in the iron ore and steel industries, the same stock will be adequate for only 25 years. Q: What about the argument that we should make the most of the current demand from China for Goan ore? ------------------------------------------------------------- China has 200 billion tonnes ore stocks. So why are they importing ours? Why are we exporting ours? Few people ask these questions. Mining companies the least. The government of course always acts as if it has no brains. It is common knowledge that exporting a finished product like iron and steel brings more money and jobs than exporting a basic commodity like ore. Exporting ore, in fact, is exporting jobs and added value. The Chinese need to be starved of ore, since their industrial production has become a major threat to the health of the planet and China's citizens. It therefore does not disturb me that instead of sending ore to China for its industrial development, we are now deciding about keeping the ore for ourselves and for our own children. Q: The Goa Chief Minister appears to hold environmentalists squarely responsible for the current situation. He said in his budget speech that the state was "being pushed into an economic turmoil of human making". The state's GDP is down 20 per cent because of the mining shut down, Mr Parrikar says. ------------------------------------------------------------- Holding environmentalists responsible is ridiculous. Who started illegal mining which he as chairman of PAC [Public Accounts Committee] documented with zest and which he said involved a theft of Rs 3,500 cr? Do environmentalists own mines and do illegal mining? Do truck owners do illegal mining? Such statements are meant only for the media. They do not disturb me in the least. In fact, the chief minister has held, at one time or the other, environmentalists, the Supreme Court, traders, the Congress party, everyone, responsible for the mining situation he faces. We all know however that the first order to suspend mining in the state was issued by his government on September 10 and on the same day and the next, his collectors issued orders prohibiting road transport of iron ore in the entire state. This was done after the revelations of the Shah Commission Report. Obviously he was seriously disturbed by it, because it more or less confirmed his own earlier findings. Since the Shah Commission findings have largely been confirmed by the subsequent report of the Central Empowered Committee, it appears that there were very good grounds for taking the action that the CM did. The Supreme Court has in fact expressed approval of that decision and rejected any challenges to it. Q: What about the argument that the state's economy has been badly hit? ------------------------------------------------------------- The CM is not an economist, so maybe he does not understand what the real state of the economy is. As per his budget speech that the state was being pushed into economic turmoil, the same speech provides contrary data. First of all he reports a GDP growth rate above 8 per cent in the last two years which is above the 5 per cent growth rate of the country as a whole and far better than the 1 per cent or minus 1 per cent GDP of some of the industrialized countries. Having a growth rate of 8 per cent and above is something very remarkable and he should take the credit for it. This growth rate has come without recourse to mining. I am therefore perplexed that instead of taking credit for running one of the most successful economies on the planet, he is saying the economy is in a state of turmoil! It is obviously because the state has adequate funds that he is able to set aside funds for purchasing the debt of truck owners and providing subsidies to taxi operators. He could not have done this if he didn't have the money. Q: But the government keeps harping on the loss of the Rs 1000 cr or so it was getting from mining royalty. ------------------------------------------------------------- Mr Parrikar forgets that the Rs 900 cr from mining royalties which went into the state budget in 2009-2010 and 2010-2011 came because of the pressure of the Orissa government for increase in royalty. Before that, the Goa government had never asked for increase in royalty and was satisfied with annual measly royalty of not more than Rs 30 crore. Income from iron ore sale is not revenue in a conventional sense. It is money that we get from sale of our permanent assets, like our gold. So to claim that the State's GDP went down by 20 per cent is only partly correct. It went down because it was artificially inflated by excess mining and windfall gains. All that extra growth did not go to Goans but to mining companies. Nearly half of it went to one company, Sesa Goa, which is controlled by Anil Agarwal in London. So it was only that part of the state GDP which was going to the wrong persons that has come down. Q: The government has also argued that it is in fact the "mining dependent" (over 150,000 people, directly or indirectly involved in the sector according to official data) who are paying the heaviest price for the closure of the mines, and not the rich mining barons. ------------------------------------------------------------- I agree. The worst hit are those who made the maximum investments in the industry in good faith. I know truck owners who sank their gold and VRS into trucks. They were not protected. They are being given doles when they need protection from harassment and rightful assistance. I do not feel that the mining dependent persons have been treated with any respect by the present government. We have insisted that their debt should be purchased at discount, an idea which Mr Parrikar has borrowed now in the budget and we have also demanded that the losses suffered by them should be compensated. We are saying this because the people involved in mining -- particularly the truck owners -- made the maximum investment in the mining industry, approximately Rs 1,400 cr. Another Rs 800 cr was put in by the barge owners. Only Rs 620 cr was put in by the mining companies. Yet the mining companies polished off Rs 48000 cr (from 2004-2009, for which we have figures), which are legitimate assets of the Goan population, giving the government Rs 426 cr, which is less than 1 per cent of total earnings (while even the Central government took 30 per cent). Q: You had recently highlighted the kind of profits raked in by mining companies in the 'big league'. ------------------------------------------------------------- In 2010-11, when the export was 54 million tonnes, mining companies made a profit of Rs 11,000 cr when the budget of the Goa government was less than Rs 6,000 cr. The profit of Sesa Goa itself was equal to all the revenue receipts of the Goa government. So it is clear that the wrong people have had to suffer because of mining closure. They did not illegally extract ore from the mine. However, those who did the illegal extraction have not been touched till date. This clearly shows on whose side the government stands today. Q: It is apparent that the state government is reluctant to go after those most responsible for causing the Rs 35,000 cr loss from the illegal mining between 2007 and 2011. The CM is even disputing the Shah Commission figures. Do you see a closing of ranks in this between those in power and those who are "powerful"? ------------------------------------------------------------- I do not see any need for "closing of ranks" between those in power and those who are powerful -- they have always been together whichever government comes to power! Sesa Goa's Annual Reports for three years showed they had made contributions of more than Rs 1 cr to the BJP, Rs 55 lakh to the Congress, Rs 10 lakh to the MGP, even Rs 1 lakh to the Shiv Sena. All these are in violation of the FCRA Act. The huge profits made were used by the mining companies to intervene in democracy and politics. We had the illusion that the present government would break that nexus. That's the permanent fate of the voting class. Q: Some would argue that the prevailing system of mining leases that began under the Portuguese is perfectly valid in a mixed economy with our free-market principles. But you don't agree, why? ------------------------------------------------------------- There is no question of a mixed economy in the state of Goa in respect of mining. Mining in Goa has been 100 per cent privately done. Because of this, large scale violations have occurred. It is therefore time to terminate this arrangement since companies which have done such large scale violations should not be permitted to mine in the state of Goa again. I think the wholly private nature of the mining trade in Goa has shown the people of this country that the private sector can be more corrupt than the government. Q: Your lawyer, Prashant Bhushan, has argued for the Supreme Court to consider the principle of intergenerational equity for the future of mining in Goa. Can you explain the concept and where this derives from? ------------------------------------------------------------- The iron ore belongs to the Goan public. The Goa government captured only 1 per cent of the value of this ore annually, whereas in better managed countries, public revenues from sale of natural resources is as high as 90 per cent. We calculated that Rs.48,000 cr -- belonging to the people of Goa -- went into the pockets of a few mining companies and a couple of offshore accounts in just five years alone. We do not think there is scope for extending that kind of arrangement again. In future, we want all the money from mining to go to the Goan public and to future generations of Goans. The Shah Commission estimated that permissions had been granted in Goa for extraction of approximately 66 million tonnes of ore which would completely exhaust the ore stock in the state in nine years. Let alone future generations, even this generation would not have any ore left! Q: But how many generations should benefit from it? ------------------------------------------------------------- What we have argued in the Supreme Court is that the ore must last at least three generations and not just one generation. We looked at other countries selling natural resources and we found that countries which are thinking of the future generations are extracting their mineral resources very carefully and depositing the earnings in a separate fund. Thus for every rupee that is obtained from the sale of the natural resources like ore, one rupee is put aside into a separate fund which cannot be touched by the government. This means, every time ore is sold, though income is generated and the ore gets depleted, the value of the ore is not lost since the government is forced to put aside an equivalent amount of money in a separate fund. For example, even if half of the Rs 48,000 cr had been kept in such a fund (a corpus of Rs 24,000 cr), and we earned only 3 per cent (after inflation), the Goa government would still be receiving Rs. 720 cr each year in perpetuity. Without any further mining at all! Q: But can this work for Goa? ------------------------------------------------------------- Yes, it can. Permanent funds are now working very well in Norway which has a permanent fund of USD 830 billion set aside for a population of 6 million from sale of its oil revenues. Similarly there are permanent funds in Alaska (US) and Alberta (Canada), which are provinces like Goa in a federal set up. Q: Mr Parrikar said in an interview to PTI in Delhi last month that if he did not get interim relief in the case from the apex court, he would "go to (Narendra) Modi for amending the law" to allow him to restart mining. How would you respond to this? ------------------------------------------------------------- First of all, the issue is not restart of mining. Even we want mining to restart in some way. But we want mining to restart so that the main beneficiaries are not those to whom the leases were given and who misused them, but those who have made the most investments in mining: the truck owners, the heavy equipment owners, the barge owners, the villages that have been compelled to sacrifice their environment, their fields, their water, their health and now their investments. Hence we are opposed to restart of fresh extraction from the ground. Ore should be removed from dumps (750 million tonnes spread out across the mining areas) and there should be simultaneous use of the dumps to refill mining pits. This will give jobs to truck owners and their families and it will also restore the ecology in the mining areas which has been badly damaged. I do not doubt that governments have the power to bring in laws to nullify the effect of judgements. The last time this was done in Goa was in the Cidade de Goa demolition case. In India, the last time this was done was with the Supreme Court judgement disqualifying MPs and MLAs indicted by the courts. The uproar against that was so fierce, the government had to withdraw the ordinance. Q: You've spent years fighting environment issues. When you look back, was this the most challenging case? ------------------------------------------------------------- Yes, because after this case, I plan to retire! We commenced filing writ petitions before the Bombay High Court from 1992 onwards against several mining companies. We clubbed them all together in one major petition in the Supreme Court and this enabled us to put all our demands in one single place before one single bench which appeared to be convinced that we had legitimate grievances. We were pitted in the Supreme Court against a huge battalion of lawyers including the most expensive members of the bar. The counsel of the Goa government was being paid Rs 7.5 lakh per day. On our side there were only two lawyers including Prashant Bhushan. I think he was more than a match for the entire bar those days, as he was perfectly convinced with our point of view. In that sense, it was an extremely challenging case. ### Contact the writer: devikaseque...@gmail.com Contact Claude Alvares: claudealva...@gmail.com