Licence to mine

Licence to mine

For the mining industry in Goa, April 21, 2014, was a historic day. The Supreme Court pronounced an end to the 18-month-long suspension of iron ore mining that had severely strained the state’s economy. The judgement, delivered by Justice A K Patnaik, allows conditional resumption of iron ore mining in the state, taking into account the principles of sustainable development and inter-generational equity.

The judgement contains multiple layers that try to tackle issues of legality, environmental impact and future governance of mining activities. “Concerns regarding illegal mining in Goa and its ecological impact have been long-standing,” says Claude Alvares, executive director of Goa Foundation, an environmental non-profit, which had filed a public interest petition in the Supreme Court in September 2012 underscoring these issues. The petition was filed following the observations of the Justice Shah Commission report, which highlighted rampant mining in the state. The commission was appointed on November 22, 2010, to look into illegal mining in Goa and six other states.

Just days after the Shah Commission report was tabled in Parliament on September 7, 2012, the government had temporarily suspended mining activities in the state. In the same month, the Union Ministry of Environment and Forests (MoEF) directed suspension of environmental clearances of all 139 mines in Goa. In October that year, the Supreme Court declared illegal those leases in which violations were detected by the Shah Commission. The court asked its central empowered committee (CEC) to investigate the matter. As a result of these orders, mining activities came to a halt.

Legal status of mine leases

The Supreme Court judgement has not condoned the illegal status of the mine leases which were operating beyond the lease period. The court clarifies that the validity of the leases in question expired in November 1987, and subsequently the maximum renewal period of 20 years expired in November 2007, as per provisions of the Mines and Minerals Development and Regulation (MMDR) Act, 1957. The state government now has to reevaluate them and grant fresh leases, while MoEF needs to give clearances. The order also says that regulatory supervision of mining operations should be carried out by state authorities, including the Department of Mines and Geology, the Goa Pollution Control Board and the national environmental regulatory body, which is to be appointed by the Central government. The national regulator, as directed to be formed by the Supreme Court in July 2011, will be responsible for undertaking independent and objective appraisal of projects for environmental clearances and monitoring of clearance conditions.

Though the end of suspension has come as a relief for the mining industry, the status of the illegal leases has made them uncomfortable. Companies such as Sesa Sterlite and Fomento refused to comment on their plan of resuming mining activity. In an official statement released on April 22, Sesa Sterlite said the “company is working towards securing the necessary permissions for commencement of operations at the earliest”.

Deemed extension: legal loophole?

Following the court’s observations, questions have arisen on how the mine leases continued to be operational when their validity expired in 2007. In their defence, the lease holders talk about deemed extension. The clause of “deemed extension” comes under rule 24A of the Mineral Concession (MC) Rules, 1960. Deemed extension, as broadly understood, allows mines to operate even without a permit, as long as the lease holder files a timely application with the state government for the first renewal of the lease. If an application for renewal is made within the stipulated time frame, typically six months before the expiry of a lease, which can be extended up to one year by the state, the period of that lease shall be deemed to have been extended till further orders from the state. The lease holders argue that the applications for renewal were filed within the stipulated time frame but the government had not acted on them. In fact, as observed in the judgement, the Goa government said it had allowed mining from 2007 to 2012 based on deemed extension status.

Delay by the state authorities to decide on the renewal applications has sustained this loophole. While probing into the matter of illegal mining in Odisha, where deemed extension has also been exploited, the Shah Commission, in its report of June last year, pointed out that the clause facilitates lease holders “to indulge in illegal mining activity at their sweet will”. The Goa government is now taking a rectified stand—it decided in the Goa Mining Policy of 2013 that no mine can be allowed on a “deemed extension” basis.

How sustainable is the mining cap?

Mining sits big in Goa’s balance sheet. The state is home to some of the most prominent mining companies in the country, including Sesa Sterlite Limited, VM Salgaocar and Brothers and Fomento Resources. Close to 150,000 people in Goa are dependent on the mining industry for their livelihood. However, the economic imperative of mining is married to ecological concerns.

The report of the Shah Commission noted that mines in Goa are located in forest areas, ecosensitive zones and close to streams and rivers, causing pollution and loss of biodiversity. Taking into account the ecological fallout of mining activities, the Supreme Court had constituted an expert committee in November last year to conduct a macro-level environmental impact assessment and to suggest a cap on mining in the state for sustainability. Based on an interim report of the committee submitted in March this year, the court has suggested capping mining at 20 million tonnes per year, subject to an adequate mechanism to regulate and monitor its impacts. The cap remains effective till a final committee report is submitted in a year’s time.

But how sustainable is this ceiling? The mining cap recommended by the court is 13.4 million tonnes less than the production level of 2011-2012. The committee points out that its recommendation is in line with the 2006 level of iron ore production in the state, before the mining boom started. But considering the ecological impact of mining and the fact that iron ore reserves in the state have to be sustained for at least 50 years, the Shah Commission had suggested a cap of 12.5 million tonnes per annum, much lower than the court’s recommendation. Also, the judgement does not clarify how the production should be allocated to maintain the cap of 20 million tonnes. The CEC report had suggested that the annual production should be fixed lease-wise considering mineral availability, area available for dumping overburden and infrastructure facilities, particularly the carrying capacity of the existing roads.

Ecological buffer

The ecological concerns of mining in Goa do not end with the suggested cap. Given the small size of the state, defining the buffer zone around ecologically important areas has been a matter of contention. As alleged by the Goa Foundation, 33 mines in the state operate within 1.5 km of wildlife sanctuaries or national parks. The CEC report of 2012 suggested that mining leases that are operational within 10 km of these areas should be kept in abeyance and their environmental clearances should be reevaluated by the standing committee of the National Board of Wildlife (NBWL). The latest order of the Supreme Court prohibits mining within 1 km.

NBWL had decided in 2002 that land falling within 10 km of the boundary of national parks and sanctuaries should be notified as ecofragile zones. It revised its decision in March 2005 and said that delineation of ecosensitive zones have to be site-specific where activities need to be strongly regulated. This decision was communicated by MoEF in May 2005 to all the state governments. Following responses of the states, the ministry is required to notify the ecosensitive zones. The counsel of the lease holders, K K Venugopal, had argued that in the absence of such a notification, mining activities cannot be prohibited beyond the boundaries of a national park or wildlife sanctuary. According to an October 2013 office memorandum of MoEF, the ministry had received proposals from the Goa government identifying ecosensitive zones around protected areas. “The ministry prepared a draft notification on March 3, 2014, defining such ecosensitive zones, which has been put forward for stakeholder consultation,” says Amit Love, deputy director, MoEF. The Supreme Court has now asked the ministry to issue a final notification within six months. “Following a 60-day review period of the draft, it is to be finalised shortly by the next government,” Love adds.

Dealing with overburden

The mining method, which is open cast in Goa, generates vast quantities of overburden or waste material. The Directorate of Mines and Geology reveals that on an average, 2.3 tonnes of waste have to be removed to produce a tonne of iron ore. The question is: where does the overburden go? “Discarding overburden outside the lease area has been a common practice in Goa,” says Girish Kumar Jangid, deputy controller of mines at IBM. “This is typically because most mines are of small size, not more than 100 hectares (ha),” he adds.

The small mining leases are a legacy of the Portuguese rule in Goa. According to the Portuguese Colonial Laws, 1906, mine leases of several minerals, including iron ore, should not be for more than 100 ha. “Since most mine leases were inherited from that period, the size of mine leases remains small,” Jangid explains.

The Supreme Court order prohibits dumping of overburden outside the lease area. The Mineral Conservation and Development rules, 1988, which deals with the matter of overburden dumping, does not specify that overburden should be dumped inside the lease area. As Jangid clarifies, the Rules note that the overburden and waste material obtained during mining operations should be dumped and stacked separately on the ground earmarked for the purpose, which should be away from the boundary of the working pit. He adds that for Goa to accommodate dumping of overburden and waste within the lease areas, bigger leases should be sanctioned while considering fresh permits. “This can be done through amalgamation of leases provided they are contiguous,” Jangid says.

The selling of iron ore remains from the overburden dumped outside the lease areas has been another major controversy. This has been going on without any permission or payment of royalty to the state. The Supreme Court has observed such illegality by underscoring that the MC Rules do not require a levy to be paid for dumping rejects, but requires so if sale or consumption is involved. Besides, any dumping beyond the lease area without a permit is illegal as that is private or government land.

Concerns of equity

Taking into account the concerns of fair share, the Supreme Court has directed lease holders who benefit the most from mining to contribute 10 per cent of the sale proceeds towards a public fund—the Goan Iron Ore Permanent Fund—for sharing the benefits. The court has ordered the state government to frame a comprehensive scheme in this regard in consultation with CEC within six months.

Although stakeholders in Goa’s mining sector welcome this development, they consider the decision to be inadequate. Christopher Fonseca of the Goa Mining People’s Front, a coalition of mining workers, says, “Ten per cent appropriation of sale proceeds is not enough to ensure long-term equity given the windfall profits that the industry has been making.”

Ramesh Gauns, a social activist in Goa, says the court could have taken a more liberal stand while suggesting the sharing of sales proceeds. According to Gauns, the new MMDR Bill, tabled in Parliament in 2011, suggests that companies that mine major minerals like iron ore will have to compensate the affected people by paying them an amount equal to the royalty they pay to the state annually. Considering this, the 10 per cent equity share is inadequate, he adds.

Will it make a difference?

Although the Supreme Court judgement has touched major aspects related to the mining industry in the state, it remains to be seen how effective it will be in curbing illegalities. Activists are concerned about the role of the state. The court places much faith in the Goa (Prevention of Illegal Mining, Storage and Transportation of Minerals) Rules, 2013. Drafted in October last year, the law includes several provisions to prevent illegal mining and to regulate the sale, export, transit and storage of the mineral. “It is not the case that illegalities were going on without the knowledge of the state. The government’s inclination towards commencing mining at the earliest can lead to half-hearted implementation of the court’s order,” says Gauns.

Authorities both at the state and the Centre refused to comment on future actions. When contacted, officials across the board—from the Directorate of Mines and Geology to the state environment impact assessment authority to the state Pollution Control Board—said that the judgement is complex and needs to be thoroughly understood before measures can be initiated. MoEF director Sonu Singh, who specifically looks into mining in Goa, adds that the Centre will only act once actions are initiated by the state.

But is it only the perceived complexity of the judgement that is holding the state officials from initiating measures? Alvares estimates that the state government is waiting for a new government at the Centre. “If the Bharatiya Janata Party comes to power, it will make matters easier for the Manohar Parrikar-led BJP government in the state to continue mining,” he says.

Will the setting up of a national environmental regulator act as a check against the political prerogative? After missing the Supreme Court’s deadline of April 30 to set up the national regulator, the Centre has argued for the next government to set it up. With a national regulator in the offing, the possibility of a new government and the economic and ecological concerns, it will be challenging to balance the mining equation in Goa.