Mining

Turning over a new lease?

Print edition : September 19, 2014

Jetties and loading points have fallen slent after the suspension of mining in September 2012. Photo: Frederick Noronha

Goa denuded by mining. Some see the position taken by the State government in the wake of the August 13 High Court judgment as a return to square one. Photo: Frederick Noronha

The Goa government decides to renew 27 mining leases on the basis of a High Court order, but this contradicts the Supreme Court directive in April to governments to garner maximum returns in the commercial use of natural or national resources.

FOR several weeks after the Supreme Court pronounced its judgment in the Goa illegal mining case on April 21, all eyes were focussed on the Chief Minister. The court had declared all mining leases under deemed extension in Goa ineffectual after November 22, 2007, clearing the ground for the State government to frame a policy and grant fresh leases. The moot point was whether the State government would take the constitutional position articulated in recent judicial verdicts that all public resources governments put up for commercial use should be subject to auction or disposed of so as to garner maximum possible returns for the public exchequer.

The main petitioner in the case, the non-governmental organisation (NGO) Goa Foundation, had put this point in the forefront of the debate over the renewal of leases. What would then become of traditional private mining firms such as the Timblos, the Salgaocars, the Bandekars and the Vedanta Resources-owned Sesa mining corporation, all of which held mining concessions handed out by the colonial Portuguese regime which were later deemed to be mining leases?

Goa Foundation filed the writ petition (WP 435/2012) in the Supreme Court on the basis of the findings of the Justice M.B. Shah Commission of Inquiry into illegal mining in Goa. It maintained that the State government was duty-bound to ensure maximum returns, auction the leases or set up a State mineral development corporation.

To drive home its point, Goa Foundation referred to the Supreme Court order on 2G spectrum allocation, the presidential reference in 2012 on alienation of natural resources, and the ruling Bharatiya Janata Party’s (BJP) statements on natural and national resources in its manifesto for the 2014 Lok Sabha elections. These held that in the event that scarce natural resources were sought to be alienated by profit-maximising entrepreneurs, adoption of means other than competitive methods to maximise revenue could fall foul of Article 14 of the Constitution.

Furthermore, the Foundation pressed the government to use the opportunity to clean up the system, identify and blacklist errant companies/traders, and, alternatively, set up a State-run corporation that would plough profits back into a public fund that would reduce taxes in the State, where the cost of living is among the highest in the country.

The suspense was finally lifted on August 18, when Chief Minister Manohar Parrikar made a statement in the Goa Assembly. He announced that 27 leases would be renewed and executed on the basis of a High Court judgment delivered on August 13, which directed the State to execute the lease deeds of those who had paid the requisite stamp duty—a total of Rs.370 crore—under a 2013 mining policy.

While the Supreme Court case was on, some miners from Goa had petitioned the Bombay High Court Bench in Goa invoking the principle of promissory estoppel to direct the State government to execute a process of renewal of those leases for which stamp duty had been collected in a concurrent process. The Chief Minister, as reported in the media, was in favour of preferencing local miners whose stamp duty payments had buoyed State finances in the period after mining had been suspended in September 2012.

In a statement given to legislators, the Chief Minister said the High Court judgment was an “intervening factor” that left the government with no option but to abandon the process of competitive bidding, something that would otherwise have been its natural choice.

He announced a schedule that would see mining restarted by December end/early January—a policy by mid-September, execution of 27 leases thereafter and a decision on other pending renewal applications. The announcement raised eyebrows in the State.

Independent MLA Vijai Sardessai dubs the government’s move as “contradictory and an eyewash”. He feels it leaves further scope for litigation, a big fear for an industry seeking early resumption of mining. “The Chief Minister’s statement is contradictory. He stresses the constitutional supremacy of the Supreme Court judgment, yet contends he has to go by the High Court order. Besides, his statement negates that of his Advocate General, who said the government would appeal against the High Court order,” Sardessai told Frontline.

The government’s contention that it would review and investigate violations of Sections 37 and 38 of the Mineral Concession Rules, 1960, after restarting mining was hardly plausible because of the long time such probes were known to take, said Sardessai. (The sections concerned deal with the transfer and amalgamation of leases.)

Goa Foundation director Claude Alvares said that since the Supreme Court was still seized of the matter, the current situation would no doubt be brought to the court’s attention (see interview). The apex court has given an expert committee on Intergenerational Equity a year to carry out sustainability studies. “The industry cannot fix the matter with the government, as has been done in this case, and expect to be free of litigation,” Alvares told Frontline.

‘End the impasse’

Owners of tipper trucks and barges who are dependent on mining transportation contracts welcome the move to restart mining. “Now is not the time to criticise. We want civil society and NGOs to come together to end the impasse. The Chief Minister has a tough job balancing the various issues—the abolition of the Portuguese-granted concessions is pending in court, extraction has been capped at 20 million tonnes for the interim, and there are a lot of other directions by the court. The entire exercise has to be carried out within these parameters. If not, it becomes open to litigation,” said Suhash Naik of the Goa People’s Mining Forum, an umbrella organisation of mining-dependent persons that has been pushing for the resumption of mining. Truckers, who have been vocal in demanding financial packages to tide over the stoppage, have acted virtually as a political force through elected representatives, mostly from the ruling dispensation, and have pressed for the early resumption of mining with a series of demonstrations.

Both sides—those pressing for a cautious, cleaned-up, capped and legal set-up and those in the industry demanding speedy resumption of mining—have been in a media and propaganda war over the past 18 months. One asserts that despite the suspension of mining, the Goan economy has survived and agriculture has thrived while the other (including the government) laments that the economy has taken a huge hit.

One economic analyst argued that the economy was bound to and did adjust to the situation. The “windfall” gains between 2007 and 2010 when international ore prices quadrupled even for 48 per cent Fe (iron) ore are a one-off, he said. (Goa’s ore is near 100 per cent export-oriented because of its low Fe content that mainly finds use in overseas markets.) According to him, the State would have had to, at some point, contend with a drop in ore prices or ore demand, or lose out to other suppliers.

The interior mining areas no longer buzz with the relentless convoys of trucks, and jetties and loading points have fallen silent. Most workers have returned to their home States, as have contract mine staff who have been laid off. Most local people who were attracted to the quick gains have fallen back on agriculture.

The Goa Mineral Ore Exporters Association (GMOEA) stated in a white paper that “the abrupt suspension of mining activities was unfortunately ordered completely overlooking the key role iron ore mining plays in Goa and its development. Regrettably, action has been taken on allegations and misconceptions that may not necessarily be true. While it cannot be denied that some fly-by-night operators could have indulged in illegal practices, it is unfair to tar the entire industry with the same brush even before a probe has been completed and charges substantiated. From the charges of a Rs.35,000 crore loss to the variance in the ore extracted versus ore exported, few allegations would stand the test of scrutiny.” Mining lessees and the Goa Mineral Association did challenge what it called the absence of principles of natural justice in that they were not heard by the Shah Commission.

Inquiries have now been ordered into violations under Section 37 and 38 of the Mineral Concession Rules, 1960. A special investigation team (SIT), assisted by 17 chartered accountants, has begun the process of examining the books of mining firms/traders and departmental records. Two former Chief Ministers have come under the SIT’s probe.

Trade union leaders see the new scenario as a return to “square one”, despite the many interim reports and cases. “Delinking resumption of mining and taking action on illegalities could mean that they go unheeded. Everyone agrees there should be some mining, but an independent authority to monitor the ground reality is needed in this sector, or things will slip back,” said trade union leader Subhash Naik George.

The government has put in a series of measures, from delisting hundreds of traders to setting up monitoring systems under the Goa (Prevention of Illegal Mining, Storage, and Transportation of Minerals) Rules, 2013.

Green activists though are unlikely to give up their demand for the public use of mining funds. Goa Foundation has begun a campaign to explain the economics of the Goenchi Mati Permanent Fund, a proposal to harvest mining money to set up an endowment or a pension fund for the State of Goa.

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