The fallacy of being a miner

Iron ore is intrinsic to India’s industrial growth. And when we talk about Iron ore availability in India than names of only few states come to our mind. Karnataka, Chattisgarh, Odisha, Jharkhand and Goa. Out of these states, Goa is one state that stands out. Of course, for its heavenly beaches, its food and its culture but also the iron ore economy.

The beaches attract lot of tourists and hence lot of forex comes into Goan and Indian economy. The iron ore mines export almost the entire produce to earn big sums of forex in Goan and Indian economy. At one point of time the earning from iron ore export went up to $7 billion.

The iron (Fe) content in Goan iron ore low and hence its best to export it. Despite the optimal use the state and the iron ore industry have been in the news for quite some time. Iron ore is a prime mover of Goa’s economy. Like blood in human body, it moves through Goa’s roads by trucks, its rivers by barges and finally the Arabian Sea by ships to the overseas destinations in China and Japan. The mines also provide employment in a state, which does not have any other industry except tourism to provide jobs.  Apart from earning foreign exchange, the mines in Goa also contribute handsome revenue to the State exchequer.

However, the iron ore mines in Goa are also blamed for adversely affecting Goa’s environment including its air, water and forests. The mines are accused of violating the laws and extracting undue favour from the state administration. One would wonder whether these mines are really assets or liabilities for the State and nation.

But to blame or praise one need to see the history of iron ore mines in Goa, which is somewhat different from other mines elsewhere in India. Iron ore mining started in Goa mainly after the World War-II while the state was under Portuguese rule. The mines enjoyed perpetual lease. In 1987, the perpetual concessions were converted into 20-year lease which expired in 2007.

Most of the mines applied for renewal of leases but the government possibly did not come forward to do the needful because it could not decide on an acceptable level of stamp duty. In 2010, the Government of India appointed Justice M B Shah as a Commission of enquiry mainly to go into the issues relating the illegal mining. Justice Shah submitted two reports in 2012 alleging wide spread illegal mining in Goa. The state government suspended all mining operations in the state from September 11, 2012. In April 2014 the apex court allowed resumptions of mining operations of Goa subject to the condition that the mines would not produce more than 20 million tonne of iron ore per annum.

Meanwhile, based on an Order passed by the Bombay High Court, the State Cabinet, in an attempt to regularise the period since 2007, decided to grant second renewal of mining leases to 88 miners.  Accordingly, between 15/11/2014 to 12/01/2015, eighty eight mining leases were granted second renewal. Incidentally, on 12/01/2015 the Mines and Minerals (Development and Regulation) Amendment Ordinance was promulgated bringing in new conditions for grant of mining leases. The Supreme Court in its Order dated February 7, 2018 questioned the validity of the decisions taken by the state government and termed its actions as taken in ‘undue haste’.

The fresh environmental clearance in respect of grant of fresh mining leases was also to be taken. The Court also observed that the State of Goa was not under any constitutional obligation to grant fresh mining leases through the process of competitive bidding or auction. The Court finally directed that all iron ore mining operations in Goa should be stopped with effect from March 16, 2018 until fresh mining leases and fresh environmental clearances were granted.

Accordingly, all mining operations in Goa come to a grinding halt on the designated day jolting not only the earning of state exchequer but to a considerable population in Goa who depends on mining.

Export market of low-grade ore is already not so lucrative as it was in the recent past. China, which was the main customer of low grade iron ore, has been more selective, but then it will still be possible to export Goa’s low grade iron ore, though on a limited scale only during the next few years before its economic value erodes further. Closure of mines at this stage can have a very adverse impact on our national economy, which is hugely benefited from the earnings foreign exchange that Goa mines make. The opportunity lost now may not come back again.

As the times is running away very fast, one proposal could be to accept the existing mining leases as automatically extended under the provisions of MMDR Act, 2015 which, inter alia, provides for extension of leases for non captive mines minimum upto 2020. As grant of second renewal of leases to Goa mines has been cancelled by the Hon’ble Supreme Court, restoration of status quo ante leading to automatic extension of the mining leases can be a viable option.

The judgement of Supreme Court is a lesson for all concerned. The parties involved must go back to the Court and plead for allowing operations under the provisions of The Mines and Mineral (Development and Regulation) Act 2015 and promise to go by the apex court’s directive for going for fresh leases when the time comes. That would be best not only for Goa but also for the nation.

 (The writer is former chairman, NMDC and Hindustan Copper)