Goa's Mining Logjam
Vol - L No. 7, February 14, 2015
Pamela D'Mello
dmello.pam...@gmail.com
Reports From the States
Web Exclusives
The stage is all set for the resumption
of iron ore mining in Goa after it was
suspended in the state in 2012, to curb
its indiscriminate and illegal mining.
The Goa government's decision to renew
the mining leases comes at a time when
the economics of iron ore mining have
changed and environmental concerns have
gained more prominence.
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The state government of Goa announced in October 2014 that it
would initially renew 50 iron ore mining leases, declared
lapsed since 2007 and suspended since 2012 following an order
from the Ministry of Environment and Forests (MoEF),
suspending environmental clearances to 139 mining leases.
This has been done in response to the Supreme Court's order
in April 2014, permitting the conditional resumption of
mining in Goa with a cap of 20 million tonnes. The court has
also asked for a mechanism that will monitor the
environmental impact of mining on Goa's ecology.
However, before 12 January 2015, when the ordinance
amending the Mines and Minerals (Development and
Regulation) Act, 1957 (MMDR Act) came into effect,
the Goa government fast tracked renewals for 87
leases of the 90 mines that were working at the
time of closure in 2012. These include leases run
by mining majors, such as the publicly listed
Vedanta-owned Sesa Sterlite as well as family-run
mines such as Sociedade De Fomento, V M Salgaocar
and Brothers, Chowgule and Company, Bandekar
Brothers etc. Some of these 87 mines had been
red-flagged by the Justice M B Shah Commission
(set-up by the central government to look into
illegal iron ore and manganese mining in Goa) and
the Supreme Court's empowered committee. The 87
leases renewed before 12 January give the
leaseholders a 20-year operational period before
being auctioned according to the new government
policy of auctioning mines. Those renewed after 12
January will be auctioned in five years as per the
ordinance.
However, the repercussions of these renewals, which will have
to get environmental clearance, are still to be evaluated.
They come at a time when the economics of iron ore mining
have changed, raising questions about viability. They also
come at a time of continuing concern about the impact of
mining on Goa's fragile environment.
Goa's fully export-oriented iron ore mining industry is
responsible for 18% of the revenue of the state. Bringing it
back to life with the partial lifting of the ban will not be
easy. International ore prices are down from $120 per metric
tonne in 2007 to $40 in December 2014. In addition, mining
companies have to pay 30% export duty and 10% of the sale
value to the Goa Iron Ore Permanent Fund. Two years of
inactivity have also cost Goa's mines in terms of share of
the market, as Australia and Brazil have filled the vacuum
through increased production.
The state government and the mining industry have sought
reduction of the export cess in the forthcoming Union Budget
for 2015-16 and are hopeful this will come through. A
monitoring and tracking mechanism for regulation has been set
in place.
The state government is also facilitating and negotiating
industry concerns about environment clearances with the MoEF
by arguing that urgent resumption is needed to ease the
financial strain on the state economy. The process, however,
is not devoid of controversy. The Goa Foundation -- the
environmental non-governmental organisation whose petition
before the Supreme Court halted mining -- has dubbed the
renewal process opaque. Its Right to Information (RTI)
petition to examine lease orders, was turned down.
In April 2014, the Supreme Court, in response to
the Goa Foundation's writ petition, had ruled that
all mining leases had expired in 2007. It directed
the state to take a decision on the leases in
accordance with the MMRD Act. It also ordered the
confiscation of 15 million tonnes of extracted ore
lying at jetties. A quarter of this was
e-auctioned under a Supreme Court appointed
monitoring committee, fetching the state government
Rs 600 crore in 2014. This process is now stalled
because of low international demand.
Though the Goa Foundation pressed for public auctioning of
leases or nationalisation by a state-owned corporation, the
state government justified its current decision to renew
pending applications, as articulated in the Goa Grant of
Mining Lease Policy, 2014. This document cites the post-ban
economic downturn, investments in labour/machinery by current
leaseholders, the need to keep out out-of-state "mining
mafia" and an August 2014 Bombay High Court (Goa bench) order
directing processing of 28 lease-holdings that paid stamp
duty during the ban period, as an "intervening factor" to
pursue conditional second renewals.
The leases were slotted into three categories; those with
minor offences like non-payment of dues, those with
violations under Rule 37 and 38 of Mineral Concession Rules
(MCR) 1960, but which could be penalised with fines (notices
sent to 53 leases), and leases with major violations that
were to be rejected.
There is some haggling over increased registration fees and
transport cess dues, and after that gets resolved, the deeds
will be executed. Leaseholders will seek reactivation of
environment clearances and before resumption will get mining
plans approved by the Indian Bureau of Mines (IBM). The state
government has, however, taken the precaution of listing
several conditions for each lease renewal, including
subjecting them to Supreme Court conditions on upper limit
production caps, the final outcome of the enquiries underway
by a special investigative team (SIT) of Goa police examining
the allegations of the Shah Commission, Public Accounts
Committee (PAC) report etc, and a 17-member chartered
accountant team looking at revenue leakages.
Tussle Between Centre and State
The miners and the Goa government, which is aligned
with the politically, economically and socially
powerful mineral exporters, have always found
themselves in a tussle with central government
authorities over mining exports and leases.
Political and economic negotiations were easier
when the same party ruled the centre and state, but
became difficult when the parties were different.
The tussle goes back to the early post-Liberation (1961)
period, when the central government, through the Indian
Bureau of Mines (IBM), attempted to treat the 596 valid
mining "concessions" granted in perpetuity by the former
Portuguese rulers, as "mining leases" under the Mines and
Minerals (Development & Regulation) Act, 1957 (MMDR Act) and
collect dead rent on the same. Several IBM orders and MMDR
amendments were successfully challenged by miners before the
Bombay High Court, until the centre passed the Goa, Daman &
Diu Mining Concession (Abolition and Declaration as Mining
Lease) Act on 23 May 1987, cancelling all concessions and
treating them as deemed leases just days before granting Goa
statehood on 30 May 1987. The concessionaire's challenge of
the Abolition Act is currently still pending before the
Supreme Court.
By November 1988, 379 leaseholders filed first renewal
applications before a cut off date, while an equal number
filed second renewal applications in 2006 for leases that
were to expire in 2007. The state government was unable to
fix an acceptable level of stamp duty, the renewals remained
pending, and functioned under a "deemed renewal" interim
clause, until the Supreme Court adjudged them as illegal in 2014.
Export or Domestic Use?
This contradiction has always been the underlying
issue in the tussle between Goa's ore exporters
(with clout with the state government) and the
central government and domestic steel industry. It
was also reflected in the Shah Commission report.
The report clearly stated that "the commercial
objectives of a few leaseholders to earn profit at
the cost of society and natural resources should
not be encouraged" and suggested that the Ministry
of Mines, Steel, Commerce and Industry should ban
exports to preserve the country's resource base.
In contrast, the Goa Mineral Policy 2013, a document that
largely reflects the thinking of the ore exporters, suggests
this is a non-issue since, unlike high grade Odisha,
Karnataka and Jharkhand ore, "Goan iron ore is not used in
Indian steel industry due to its low Fe content (56-58%)" and
domestic value addition opportunities are minimal.
The policy underscores the importance of Goa's
export industry to its economy (contributed Rs 980
crores in 2010-11, or 18% of tax and non-tax
revenues) and makes a further case to differentiate
Goa's reserves from high grade ore of other states.
It complains that policy decisions about Goa
exports are "largely influenced" by the Union of
India, disregarding this difference, and
"discouraging exports" by "ad-hoc" increasing
export duties (six times in a 15 month period) from
5% until 2011 to 20% and later to 30% in March 2013
and by the MoEF imposing bans on new mining areas
in 2010-11. Besides, an estimated Rs 4,000 crores
annually collected as duty "is not shared by the
Union with the State of Goa". It notes that the
National Mineral Policy 2009 "has made export a
third priority after import substitution and
value-addition in that order".
The Supreme Court ruled out banning exports, but imposed an
interim annual cap of 20 million tonnes on extraction (other
than from dumps), until its expert committee submits a macro
Environment Impact Assessment (EIA) to determine
sustainability and inter-generational equity. The state's
suggestion of a 45 million tonne cap was rejected, but the
industry itself is hopeful of an upward revision, if it can
improve on ground infrastructure -- essentially a dedicated
mining corridor road that has already attracted flak for
involving the diversion of still more forestland.
Environmentalists argue that exports to foreign
nations like China (which preserve their own
reserves) can hardly justify the massive
destruction of forests, pollution of rivers, ponds
and fields that open cast mining involves. Through
the 1980s and 1990s, exports averaged 14 million
tonnes annually, far less than the 54 million
tonnes it peaked to after 2000 that triggered the
environmental and social crisis.
Shah Commission
The Shah Commission, appointed to probe
illegalities, went through the industry's
operations with a very fine toothcomb and opened a
can of worms. Its report revealed how the
industry, including the state's mining barons and
its political heavyweights, were indulging in
questionable practices.
The dark side of Goa's mining industry had earlier
sporadically manifested itself in strong-arm takeovers of
private jetties and mines from previous sub-lessees, using
bouncers and musclemen; forging of wills; creating
inter-family feuds between heirs of concessionaires;
manoeuvres to control mine managements and muscle out
partners. The public remained largely clueless about the
backroom business machinations of the upper echelons of its
respected citizenry, until the Public Accounts Committee, the
three Shah Commission reports and the Centrally Empowered
Committee of the Supreme Court laid bare some of it, and
sought further investigation.
Mining Dumps
The industry, lessees and its major association, the Goa
Mineral and Ore Exporters' Association, repudiated the
findings of the Shah Commission on most counts. They claimed
they were not legally represented and baulked at its blacker
than black projection of the industry.
They denied encroachments, pointing out that the areas used
for rejects/overburden storage had been rented from private
owners/government and were not directly owned by
leaseholders. They said that these were necessary for optimal
utilisation of lease land to "win minerals for the country".
The Supreme Court, in its judgment on the Goa Foundation
petition 435/12, however held that unauthorised dumping
outside lease areas without environmental clearances was not
permissible and required payment of royalty for its removal
from the lease area. A report of its appointed expert
committee to decide on how mining dumps (estimated at 764
million tonnes strewn outside leases, of which an estimated
20% or 150 million tonnes is projected as saleable) should be
dealt with has been filed before the Supreme Court, awaiting
its perusal.
Miners have their own plans to export and monetise some of
their dumps as articulated in the Goa Mineral Policy 2013.
Dumps were "worked" during the height of the "windfall" years
(2007-2012), when even low grade erstwhile rejects of 45% Fe
became saleable to China. That market has since been lost,
but not indefinitely.
Dump handling had become controversial in the
"windfall" years, with established miners blaming
the former Digamber Kamat-led Congress government
for permitting a laissez faire environment. Some
400 fly-by-night traders zoomed in on the rejects
market to ship overseas, clogging roads and leading
to a public outcry. Dump handling was banned in
late 2011, but not before some 20 million of the 54
million tonnes exported at its peak, came from
dumps. The new government threw out excess
traders, trimming the list down to 40.
Eco-sensitive Zones
Though industry and the state government is now seeking
reactivation of the MoEF granted environmental clearances,
environmentalists are expected to closely monitor the
process, since the environmental clearances had come in for
much criticism. Following the criticism, the MoEF had
appointed an expert appraisal committee to reassess the 137
clearances issued. The summary report had recommended
revocation of 41 clearances to leases within one km of
protected areas, a further 29 leases for giving misleading
information, besides identifying leases that operated without
fulfilling conditions laid down.
From being a completely unregulated industry in the
1960s that paid no rent and used primitive
technology, the mining industry today protests
against the plethora of environmental laws it now
comes under. However, the devastating footprint of
indiscriminate mining finds it few sympathisers in
the state. Mining has impoverished and displaced
tribal and interior villages by choking subsistence
agriculture, plantations and daily living.
The industry has legally resisted the steady shrinking of
mining areas. But the Goa Foundation has successfully
litigated and obtained apex court orders to implement mining
bans within national parks and sanctuaries (in 2000); within
one km of the same (in 2006); and mandatory National Board of
Wild Life Standing Committee permits to operate within 10 km
(in 2006). That green groups have managed to get the
Netravali and Mhadei Wild Life sanctuaries notified during a
brief period of President's Rule in 1999, and are currently
attempting to prove tiger presence in the Mhadei sanctuary
area to have it upgraded to a reserve, is indicative of the
ongoing tussle.
Over the past months, there have been several
minister-to-minister consultations between centre and state.
The MoEF's notification of a one km eco-sensitive zone around
sanctuaries is being resisted by the state government, which
wants a zero ecologically-sensitive Zone (ESZ) or provisions
to phase out 32 mines in a one km ESZ over ten years.
The issue is further log-jammed with the state
government objecting to both the Madhav Gadgil
Western Ghats Environment Expert Panel (WGEEP)
report and the High Level Working Group (HLWG)
report under K Kasturirangan, since both would
adversely affect mining in the Western Ghats
region. Though the MoEF has been directed by the
National Green Tribunal to expeditiously declare
final notifications for ecologically sensitive
areas (ESA) for six states, ground level surveys
have yet to be carried out in Goa. The Save the
Western Ghats Movement in Goa places its hopes in
the judiciary to prevent whittling down of the ESA.
It accuses the government of "honouring"
environmental and mining violators with renewals,
and confusing villagers that all industry and
development will halt in the ESA, when only red
category industries, including mining would be
banned. Mining's contribution to the state revenue
is overrated they assert. It generated Rs 980
crores in royalty only in two financial years from
2010-12. Prior to that, Rs 30 crore royalties were
generated a year on average.
Truckers, Barge-Owners and Migrant Workers
While mining hit the agriculture/plantation economy hard, it
had strategically built a support base of truckers, machine
contractors and owners of river barges, creating a deep
divide between anti and pro-mining villagers. In the downturn
years, the industry was thus able to minimise its
liabilities, having externalised major costs of transport and
machinery. During the ban, the industry had virtually no
liabilities, aside from office staff at headquarters
(estimated at just 3,000 people across industry). It employed
out-station mining engineers and workers on contract, who
were laid off in the hundreds. Most returned to their home
states while locals were reabsorbed in other sectors of the
economy. The state government and the public exchequer were
left to work out a package for truckers and barge-owners who
were burdened with bank debts.
Resentment is mounting as a third season goes by without
resumption of mining. The earliest projections for a
staggered start are March 2015. Frenetic mining and
transportation in the windfall years had galvanised
downstream establishments catering to 20,000 trucks,
machinery, barge building industries and an army of
migrant/contract workers, creating a ripple effect on the
economy of those areas, and indirectly providing employment
to 1.5 lakhs according to government estimates. These people
have since fallen back on an agrarian and government job
economy, with all but the more hopeful waiting for a
resumption that is unlikely to be the same.
When mining resumes, it is likely to be far more regulated
and major companies have already indicated that operations
would have to shift to larger trucks, making the current ones
redundant.
--
Pamela D'Mello (dmello.pam...@gmail.com) is a Goa-based journalist.
References
Department of Mines, Directorate of Mines and Geology (2013):
"Goa Mineral Policy, 2013", Panaji: Government of Goa,
http://www.goadmg.gov.in/Uploads/71.pdf, accessed on 13
February 2015.
Megha Mandavia (2014): "Goa's Ghost Mines: Face of iron ore
mining set to change forever", Economic Times, 24 December,
http://articles.economictimes.indiatimes.com/2014-12-25/news/57395425_1_mining-trucks-mining-leases-mining-companies
,
accessed on 7 January 2015.
Principal Findings of the Vishwanath Anand Expert Appraisal
Committee, http://www.goafoundation.org/mining/, accessed on
6 January 2015.
Report of the Justice M B Shah Commission of Inquiry, Parts
I, II and III, http://www.goafoundation.org/mining/, accessed
on 6 January 2015.
Report of the Supreme Court appointed Central Empowered
Committee (CEC), http://www.goafoundation.org/mining/,
accessed on 6 January 2015.
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Mining Case, http://www.goafoundation.org/mining/, accessed
on 6 January 2015
The Goa Grant of Mining Leases Policy, 2014,
http://www.goadmg.gov.in/Uploads/303.pdf, accessed on 4
January 2015.
White Paper: Goa Mining: Sustainable Legal Operations- Not
Suspension,the Solution. Goa Mineral Ore Exporter's
Association;
http://www.gmoea.com/uploads/file/White%20Paper.pdf, accessed
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