The mining industry in Goa is in doldrums. Is legislation the only solution?

Goa Chief Minister Manohar Parrikar announced on Friday that he will be meeting Prime Minister Narendra Modi on August 7 to discuss the mining crisis that Goa is facing. Parrikar said he will apprise the Council of Ministers appointed by the PM about the situation and will convince the Centre to amend the law in order to restart mining in Goa.

The mining industry in Goa is in doldrums, probably since 2012 when the Supreme Court had first suspended mining operations. Let’s understand the crisis from the eye of the storm.

What is the crisis?

To understand what the crisis, let us look at a brief timeline of events that have transpired.

# In 2011, Goa had exported over 50 million tonnes (MTs) of low-grade iron ore. The exports to China had seen a sudden surge ahead of the 2004 Olympics as demand soared in the steel industry

# March 15, 2012: Justice Shah submits a report on illegal mining activities in Goa

# September 7, 2012: The report is tabled in Parliament along with an ‘Action Taken Report’

# September 11, 2012: Government of Goa suspends all mining operations

# April 2014: The Supreme Court limits production in the state to 20 MTs. It also observes that all iron ore and manganese ore leases had expired on November 22, 2007 as under MMDR Act [Mines and Minerals (Development and Regulation) Act 1957]. Consequently, any mining carried out by mining lease holders after that date is illegal.

# February 2018: The Supreme Court cancelled 88 mining leases which were renewed by the Goa government for the second time instead of going for fresh auctions. Hence, the SC had ordered shutdown of all Goa mines after March 15, 2018.

Who are the petitioners?

An NGO called Goa Foundation had filed a writ petition in the Supreme Court, asking the government of India and the government of Goa to terminate the mining leases where it was carried out in violation of various statutes.

Goa Foundation is of the view that large-scale mining of iron ore has led to several adverse impacts, including those related to the environment, ecology and the health of the people of Goa; and that these illegalities were committed by almost all mining lease holders. They based their argument on reports submitted by Justice Shah, the EAC and other expert committee reports.

When we spoke to the head of Goa Foundation, Dr Claude Alvares, he accused the government of being hand-in-glove with private players in order to augment profits.

What has been the impact? Who are the stakeholders?

The Supreme Court judgment has affected Goa manifold. For instance, the state GDP of Goa decreased by almost 25 percent from 2011-12 to 2013-14, according to the state economic survey. However, it later picked up dramatically after mining was resumed in 2014.

According to MoSPI Statistical Survey 2017, more than 2.5 lakh Goans have been affected by the closure of the mining industry. The survey noted that more than 53,000 jobs in mining, trucking and barging industry have been affected directly; the mining lease holders have obviously been affected by this shutdown. Besides, over 60,000 livelihoods dependent on mining and ancillary industries have been adversely affected.

As per Budget 2018-19, the Goa state exchequer receives about 30 percent of its revenue from mining, which will amount to Rs 641 crore if 20MTs of iron ore is extracted. This dent in Goa’s budget will constrain funds for social welfare and health schemes.  In addition, revenue from mining could be a shot in the arm for Goa as its debt has been increasing at CAGR of 11.5 per cent since 2012.

Then why did the Supreme Court give this ruling?

An Expert Appraisal Committee (EAC) constituted by the Ministry of Environment, Forest and Climate Change (MoEF) in its 2013 report found that many mining lease holders had: (i) No approval from the National Board of Wildlife; or (ii) Indulged in excess mining; or (iii) Indulged in dump mining; or (iv) Intersected groundwater level; or (v) No clearance from the Central Ground Water Board to draw ground water; or (vi) No forest clearance.

The apex court observed that the government of Goa gave second renewals to mine lease holders despite them flouting norms. In its judgment, the top court clarified that even though it had given the Goa government the authority to formulate a policy regarding granting of mining leases, the former’s decision to grant second renewal was “erroneous”.

The Supreme Court emphasized that the state government should pursue “a non-discriminatory policy for disposal of natural resources” and that auction by competitive bidding, including e-auction, was the best way to proceed, although not constitutionally binding.

Justice Madan B Lokur, while pronouncing the verdict, held that, “Therefore, in principle, the decision of the state of Goa to not auction the grant of mining leases was flawed in that it did not serve the common or public or social good but primarily assisted in filling the coffers of private entrepreneurs”.

Why auctioning is not a viable option?

When asked about the possible solutions to this conundrum, experts suggested three options:

1. Auctions by competitive bidding
2. Forming government corporations
3. Change in legislation

On being asked about the environmental concerns flagged by Justice Lokur in his judgment, he said, “On what basis is the Supreme Court levelling these allegations? Justice Shah’s report is already filled with discrepancies and its credibility is questionable.”

About depletion and contamination of groundwater in Goa, Cabral told Moneycontrol, “Only 3 percent of Goa’s land is used for mining. It cannot affect the entire state’s groundwater table. Besides, Goa has about 40 percent green cover, one of the highest in the country."

When asked about the Supreme Court’s observation that the Goa government was working in cahoots with private players for profit optimization, he denied the allegations. He said, “The government works for the people. We are elected by the people, unlike the Supreme Court, which is nominated.”

Cabral told us that holding fresh auctions is not a viable option as it will take 8-10 years to commence operations after auctioning. Besides, surface rights and environmental clearances will make the process cumbersome. Asserting that the laws in India vis-à-vis mining need to be updated and brought on a par with other nations, such as Australia, he said the process of holding auctions pan India has earned the government a little over Rs 1,000 crore.

What is the way forward?

Most stakeholders have pinned their hopes on a change in legislation as the fastest and most effective way out of the vicious legal cycle. For this purpose, Cabral introduced a Private Members resolution in the state assembly on August 3, which was approved by the government as well as the opposition. This will be followed by Parrikar’s visit to PM Modi on August 7. If the meeting’s outcome is positive, an ordinance or a legislation will be passed, hopefully before October, which is when the mining season begins in Goa, after the conclusion of monsoon.

What is this amendment: Legal Fineprint

The BJP government in Goa has proposed an amendment to Section 2 of the Goa, Daman and Diu (Abolition of Concession and Declaration as Mining Leases) Act, 1987. The amendment is aimed at altering the retrospective date of conversion of concessions to leases from 1961 (when Goa was liberated from the Portuguese) to 1987. This amendment would extend the validity of leases from 2007 by at least 20 years.

This will be read with the Mines and Minerals (Development and Regulation) Act, 1957, which was amended in 2015 to increase the duration of the lease to 50 years. The amendment stated that after the completion of 50 years from the date of issuance, the lease cannot be renewed for a second time and will be put up for fresh auction.

A legislation incorporating these amendments will effectively overturn the Supreme Court verdict that cancelled leases of mine owners who continued mining activity after November 2007.