The rescue capsule

Published May 9, 2014, 9:17 am IST
Updated Jan 10, 2016, 8:38 am IST
The very idea of wanting to export national mineral resources is misplaced
An iron - ore mine in Goa. (Photo: File/DC archives)
 An iron - ore mine in Goa. (Photo: File/DC archives)

The balance between guarding the potential damage to the environment by an industrial activity such as mining and its benefit to society is a delicate one. For far too long, reckless and unregulated mining has been allowed to destroy the living environment of vegetation, water courses, and the animal life and human habitation that depends on them. This has happened in Goa, Karnataka and Orissa, among other states.

Court-appointed commissions (such as the M.B. Shah Commission) have formulated a stringent critique of existing practices. But it’s only when the Supreme Court intervenes that its recommendations have the force of law. So in a sense the controversy that has dogged iron ore mining in Goa got a closure on April 21.


While the 111-page judgement concentrates on the specifics of the situation in Goa, it is bound to have wider repercussions. The court in its ruling concedes many of the points made by the petitioner, Goa Foundation. It notes the work by the Justice Shah Commission whose report on Goa iron-ore mines was tabled in Parliament in September 2012.

Among other things the Shah Commission states that mining after 2007 was illegal (the Goa government closed down the mines in 2012), and around 28 sq. km of land was illegally usurped by the mine-owners. Another central body, the Central Empowered Committee, found that in the five years between 2006 and 2011 the iron ore exported was 40 million tonnes more than mined in the state, indicating that it was illegally mined.  

Further, mining of nearly 42 million tonnes per year of iron ore has led to “massive negative impacts on all ecosystems leading to enhanced air, water, and soil pollution.” In the interests of sustainable development and intergenerational equity, the  court was willing to “permit a maximum annual excavation of 20 million metric tonnes from the mining leases in Goa”.

The court further rules that mining by lessees in Goa after November 2007 was illegal that no mining should be allowed one kilometer from reserved forest and sanctuaries, that the government has to set aside 10 per cent of the sale value of the existing unsold dumps of iron ore (15 million tonnes) and of later production for a Goan Iron Ore Permanent Fund for “sustainable development and inter-generational equity,” that is, money for future generations (apart from the royalty) once the iron ore is exhausted.

The Goa Foundation sees the judgement as a victory and says, “The declaration that the mining was illegal from 2007 leaves the door open for proceedings for recovery of some Rs 30,000 crore from the lease-holders since the ore was illegally mined. Besides the Rs 30,000 crore, it also has to recover Rs 35,000 crore as per the Shah Commission’s findings (mining outside lease areas). Meanwhile, the state of Goa is already getting the sales proceeds from the disposal of inventories of 15 million tonnes which are in the midst of e-auction. This will be worth Rs 4,500 crore. We are talking of some Rs 70,000 crore worth of illegal mining, which is 16 years revenue of the Goa government!”

There are two significant fallouts from the court’s ruling. The idea of a reserve fund for future generations puts the reckless mining of mine-rals in some perspective. The mining bosses make huge profits, the people who used to live on the mined land suffer. The Shah Commission in its report on Orissa, makes this point several times. “Half of the amount received by the state should be used for the welfare of the area from where the minerals are extracted... If 10 per cent of the average mining income is utilised for providing basic facilities (drinking water, roads, hospitals, schools, etc.), in eight years, 10 per cent of yearly income would be Rs 2,498 crore. If this income is used for the development for these two districts, they would be equal to well-developed districts of any developed state.”

The second consequence is that mine-owners will not be able to get away lightly by taking more land than they are allotted. The penalties are likely to be heavy. The very idea of wanting to export national mineral resources is misplaced. It puts us in the same primitive colonial situation of exporting our raw materials and importing the finished product, in this case iron ore and steel. It’s far more rational to add value and employment in the country by making steel rather than get a much smaller amount by exporting ore.

The argument that the export of iron ore is needed to reduce our current account deficit is also fictitious. The import of gold, an unnecessary luxury imported since 2010 at almost zero duty, at one time amounted to $80 billion, several times more than the export of all minerals put together, and the highest import after petroleum. We were thus allowing the export of valuable limited natural resources to finance a luxury for the rich.  

The price of iron-ore also shot up dramatically on rising demand from China around 2005 before the 2008 Olympics. Iron ore exports, that had been stagnant for a decade till 2005, began to shoot up along with the prices. Now with international ore prices, declining again to more reasonable levels the mine-owners can no longer make windfall profits.

During 2004-09 mine-owners made a total of Rs 48,000 crore but they only invested Rs 620 crore in their business while the Goa government got only Rs 426 core or less than one per cent of what the miners got. The Goa Foundation maintains that a much larger investment of Rs 1,400 crore was made by the thousands of rich villagers, government officials and others in trucks to transport the ore, while barge owners invested Rs 800 crore. It is these people who stand to lose the most in case mining is stopped.

This need not be so. In a recent interview Claude Alvares, director of Goa Foundation, said the truckers can recover most of their investment if the government were to use them to remove the waste from the iron-ore dumps and use them to refill the 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.”
Not a bad option for those who were taken in by the mining mania.