Minerals are the natural resources most easily converted to cash. This drives rent seeking, illegal mining, bending of rules, turning a blind eye to violations, under and over invoicing and a variety of other malpractices that are widespread. This has been well documented in a number of states including Rajasthan, Karnataka, Goa, Odisha, and Jharkhand.
More worryingly, it has been found that extraordinary amounts are being stolen from our mineral commons within the current system. In Goa, over an eight year period (2004–2012), 95% of the value of the minerals was lost. The per-head loss from recent “legal” lease renewals was Rs.10 lakhs. Data from across the country for iron ore, coal, oil and gas shows a similar trend. Everyone is losing equally, while a few are becoming super-rich. This is looting economics, not trickle-down economics.
This underpricing of our minerals is clearly unfair. Miners have all incentives to extract as quickly as possible, before the people realize what is happening. This haste causes enormous damage to the environment and human rights. It leads to widespread corruption and uncaring governance. This in turn, often leads to conflict and civil war. But there is a way out.
Related article: In conversation with Rahul Basu on Intergenerational equity
Today civil society has the historic opportunity to install a new framework to determine how we shall henceforth use our precious natural resources. Recently, the Supreme Court, after a discussion on Intergenerational Equity, directed the Government of India to have a fresh look at the National Mineral Policy 2008. In response, the Government has set up a committee whose report is due Oct 31, 2017. This is an opportunity for us to appeal to this committee to demand what is right for us, our children and future generations.
Goa Foundation, mines, minerals & People, Common Cause and the Goenchi Mati Movement appeal to civil society to come together to demand from our government a fair and just National Mineral Policy. Natural resources are our shared inheritance. It is our duty to ensure that we protect our inheritance for future generations — the principle of Intergenerational Equity (IE). The current policy is grossly unfair and unconstitutional. It subverts Intergenerational Equity. The Government said this in the latest Economic Survey:
Economic Survey 2017–18, Chapter 13, Box 1: Supreme Court of India Judgement on Goa Mining
The judgment of the Supreme Court of India in WP 435/2012 (Goa Foundation vs UoI & Ors, the Goa mining case), was the culmination of a series of landmark judgements on the subject of managing natural resources in public domain. In this case, the apex court ordered a cap on mining as well as the creation of a Goan Iron Ore Permanent Fund to meet the ends of inter-generational equity and sustainable development. When considered along with earlier SC judgements on the public trust doctrine, notable CA 4154/2000 (Fomento Resorts & Anr. Vs Minguel Martins & Ors) and on the disposal of natural resources, notably WP 423/2010 (CPIL & Ors vs UoI & Ors, the 2G spectrum case), a new picture emerges of minerals.
What implications does the SC Judgement carry for natural resource management?
Natural resources, including minerals, are a shared inheritance that needs to be preserved for future generations. As sub-soil minerals are largely owned by the States, and offshore minerals by the Centre, the states are the trustees on behalf of the people. The cap on mining in Goa is to ensure the availability of minerals over several generations as well as to limit the environmental damage from permitted extraction.
The proposal for exploring the creation of a Goan Iron Ore Permanent Fund is notable for being the first that has potential to be established by judicial action. Norway and over 50 other countries / sub-nations have created Permanent Funds based on extracting economic rent from oil or other natural resources. The oldest of these funds, in Texas, dates back to 1876.
As a part of The Future We Need campaign, letters have been sent to the KR Rao Committee by
- Environics Trust
- Mazdoor Kisan Shakti Sangathan (MKSS)
- Oxfam India
- Samata India
- SETU: Centre For Social Knowledge & Action
- Video Volunteers
- Dhaatri Resource Centre for Adivasi Women and Children
- Sakhi Trust
It is addressed to the committee that has been tasked with relooking the policy. The letter outlines principles that will ensure the forming of a fair mineral policy.
Ministry of Mines, Section-V
Government of India
Shastri Bhawan, New Delhi 110001
Email: Dr. KR Rao, Chairman, firstname.lastname@example.org
Email: Shri Bipul Pathak, Member Secretary, email@example.com
Please find enclosed our representation on the new National Mineral Policy. Natural resources are our shared inheritance. It is our duty to ensure that we protect our inheritance for future generations. Only if we do that, may we consume the fruit. A loss is a loss to our children and all future generations.
Minerals, our family gold, are the natural resources most easily converted to cash. Extraordinary amounts are being stolen from our mineral commons within the current system – our largest scams are over natural resources. The MMDR amendment has extended all existing leases, worsening the situation. And even the trifles we receive are treated as revenue, and spent – we’ve consumed our children’s inheritance.
This review of the National Mineral Policy provides the fantastic opportunity for us to set things right. The new National Mineral Policy must include these salient principles:
- Natural resources are the commons and the state is the trustee for the people and especially future generations (Public Trust Doctrine).
- The commons are inherited. We are only custodians. Our duty is to ensure preservation of the principal value. Only then may we enjoy the fruit of the commons. (Intergenerational Equity Principle).
- Any income from the commons must only be shared equally with everyone, as a right of ownership, a commons dividend or Citizen’s Dividend.
- If we decide to sell some commons, we must ensure preservation of the principal. This requires:
- a) When we sell, we must not suffer any loss. We must get the full economic value.
- b) Every paisa received must be saved in a new “inheritable asset” (a “non-wasting” asset). An inheritable asset is one which retains its value over multiple generations, potentially indefinitely.
These principles, implemented faithfully, will be a giant step towards achieving Justice, Liberty, Equality and Fraternity within our nation.
In order to reflect these principles, the National Mineral Policy must incorporate the following:
- All mining must be on a zero loss basis. We cannot afford to lose any part of our children’s inheritance.
This requires us to do the following:
(a) Illegal mining is simply theft from our children and must be punished severely
(b) The Government must prove that the terms of any fresh mining prevent a loss
(c) If there are any mines where we are losing any of the value of our children’s inheritance, the Government must pursue all legal avenues to cancel the lease
- All receipts from minerals should be treated as a capital receipt from the sale of our children’s inheritance. Following the Goa example, this should be deposited in a Future Generations Fund, with the state as the trustee on behalf of the present and especially future generations. This is already the practice in over 50 countries & sub-national entities. The following steps must be followed:
(a) Any receipts from new leases must be deposited into the Future Generations Fund
(b) All auction premium from mineral auctions should be deposited into this Fund
(c) At present, royalty is treated as revenue and spent. This must stop within five years
Any loss is a loss to everyone equally, effectively a per-head tax, highly regressive.
- The Future Generations Fund should be managed by the National Pension Scheme. The primary investment goal is to maintain the real value of the corpus in the face of rising prices, and various other threats like corruption, expropriation, etc, and to earn real income. The real income must only be distributed to all the people as a Citizens’ Dividend. Any loss or diversion is effectively a per-head tax, immoral.
- Minerals represent opportunities. Mining must be limited to ensure availability of the mineral & the income from extraction over multiple generations. For the environment, we must impose area-wide limits on extraction under the Precautionary Principle. We must first try to avoid any damage. If damage is inevitable, it must be fully compensated for under the Polluter Pays Principle.
- FPIC (“Free prior informed consent”) of the mining affected is necessary before mining. During mining, the District Mineral Foundation must be controlled by the mining affected, and the plans must be developed through participatory planning and budgeting.
- As minerals are some of our most valuable assets, the state must implement a cutting edge control system. This includes satellite, drone and lidar imaging, system auditors, aadhaar tracking, fit & proper person tests, a whistleblower rewards and protection scheme, etc. Mining entities should also be audited frequently.
- The people, as the real owners, should be permitted to satisfy themselves at any time that their children’s inheritance is protected. This requires radical transparency including the ability to conduct social audits, and open access to the public to all data (including the data feeds) in real time at no cost.
We ask the government to include these principles in the new National Mineral Policy and implement them faithfully. Let us be remembered as the generation that changed the course of history, not the one that destroyed the planet.
For and on behalf of
Rahul Basu is Member of Goa Foundation.