Over the last decade, the Supreme Court has issued a series of landmark judgments around natural resources, including Niyamgiri, 2G spectrum, coal blocks, and iron ore mining in Karnataka, Goa and Odisha. Common themes include consent of the people on the ground, ensuring zero loss when selling natural resources, equal access to private players to resources, intergenerational equity and sustainable development. Goa is unique in that all mining has been declared illegal, giving the state an opportunity to redesign mining from first principles. How should 21st century mining look?
Under the Constitution, the minerals of Goa belong to the state of Goa (Art 295). However, under the Public Trust Doctrine (Article 21 Right to Life), the state government is merely a trustee of natural resources for the people, and especially future generations. In other words, the people of Goa own the minerals in common. Further, under the Intergenerational Equity Principle (Article 21 Right to Life), as we have inherited the minerals, we are simply custodians and must pass them on to future generations. Only if we do that, may we consume the fruit. A loss is a loss to our children and all future generations.
Mining leaseholders do not own the minerals under the ground. Only if they have (a) a valid mining lease, (b) obeyed the law, (c) actually extracted the ore and (d) paid for the ore, do leaseholders gain ownership over the ore.As the Supreme Court clarified in the Odisha mining case, mining without a lease or required environmental clearance or in breach of any of their terms is illegal mining, which requires recovery of the illegally mined ore or its full value.
Consider the case of inherited family gold. Intergenerational equity can be met by keeping the gold as it is, but gold earns no income. An alternative is to sell the gold and invest the proceeds in land. Provided owners maintain the productivity of the land, by crop rotation or keeping it fallow, they can consume the harvests. And so could all future owners. Any loss of the initial capital is a permanent loss to all future generations.
In a similar vein, states as owners must strive to sell their mineral for zero loss, i.e., its economic rent (the sale value minus cost of extraction minus reasonable profit for the extractor). Whatever the owner receives for the minerals must be saved in a new “non-wasting” asset such as an endowment fund. Since this asset has been financed from the mineral commons, it should remain part of the public trust. The state, as trustee, must prevent theft or erosion of value of the fund through inflation. Provided the capital is intact, the income should be distributed equitably as a commons dividend, a right of ownership. The people alive today consume the dividend. Future generations will receive a dividend in their time.
Loss of Goa’s natural resources
Mining was one of the larger sectors of the Goan economy, although it has never exceeded 7.5% of GSDP. It has provided employment and to a lesser extent, has provided funds to the state government. However, mining is also Goa’s largest environmental and social problem. It has destroyed our fields, khazans and rivers, our source of fish curry and rice. It has damaged the lungs of lakhs living in the mining belt and been responsible for numerous deaths as well.
Worse still, it is estimated that the system of mining leases has resulted in the loss of over 95% of the value of our minerals. And even the trifle that was received was spent, not saved for future generations. The total loss was enormous: nearly twice the state revenues, or over 25% of per capita income, or thrice the poverty line. The loss was effectively a per head tax equally on everyone. A few have become rich from our children’s inheritance. This is clearly not a reasonable situation.
Mining is the single largest source of corruption in Goa, and it is the root cause of the poor governance in the state. There have been numerous reports on illegalities in mining, including (a) the PAC Report, (b) Shah Commission Report 1 and 2, (c) CEC Report, (d) EAC Report to MoEFCC (Ministry of Environment, Forests and Climate Change), (e) CEE/Gadgil report on EIAs, (f) Shah Commission Report 3 (g) Report by 17 CAs. Investigations are also underway by the Special Investigation Team, Lokayukta and the Enforcement Directorate.
2014 Supreme Court judgment
In 2014, the Supreme Court ruled that all mining in Goa after Nov 22, 2007 was illegal! 100% illegal. The estimated amount recoverable on account of illegal mining exceeded Rs 65,000 crores, when Goa’s public debt was Rs. 9,000 crores and GSDP for FY 2013-14 was merely Rs 35,921 crores.
The SC also required “fresh leases and fresh ECs” to be granted. On grounds of intergenerational equity, the SC imposed an interim annual cap of 20 million tons, in order to limit the environmental damage and ensure access to mining work for future generations of Goans. The SC also imposed a fresh levy of 10% of the sale value of ore to be put into a Goa Iron Ore Permanent Fund, a global judicial precedent.
In late 2014 and early 2015, in an attempt to regularise the illegal mining period, the Goa government retrospectively backdated 88 lease renewals. 31 renewals were conducted on the day the MMDR Act was amended by Ordinance to prevent mining lease renewals.
On February 7, 2018, based on PILs filed by three different petitioners, the Supreme Court quashed these lease renewals. In effect, it restored the earlier position that all mining after November 22, 2007, was illegal.
Mining in Goa in future
The loot has been stopped once again. The government has been handed a clean slate, a golden opportunity to redesign mining. There are enormous amounts recoverable due to illegal mining. There are large scale environmental problems caused by mining that needs fixing – 750 million tons of dumps, numerous mines that will never reopen, damaged aquifers, silted fields, khazans and rivers. There are significant numbers without employment, and a lot of small businessmen – machinery, truck & barge owners – who need to find other work for their assets.
Keeping in mind Constitutional requirements and the present situation, Goa Foundation proposes this course of action:
- Illegal mining is simply theft from our children and must be punished severely. Offenders must be blacklisted, prevented from handing public resources. We must introduce legislation for whistleblower protection and rewards, recover what is due from illegal mining and deposit these amounts into the Permanent Fund.
- FPIC (“Free Prior Informed Consent”)of those affected is necessary. The District Mineral Foundation must be controlled by the mining affected and the plans developed through participatory planning and budgeting with the mining-affected
- Interim plans: Mining restart will take time to put in place. New ECs would be required, which will take some time. Also, it is unlikely to ever reach earlier levels. For the interim plan:
- The unsaleable dumps will be used to restore abandoned quarries and mines, and mines that will never reopen – in the wild life sanctuaries for example.
- The environmental damage from mining must be repaired. Fields and rivers must bedeviled. Aquifers repaired. Land used by dumps must be restored to productivity.
- The draft Goa Regional Plan proposed a diversion of the coastal highway through the mining belt. This should be implemented, it will provide work for trucks. When complete, it will improve the alternative economic prospects in the mining belt.
This will provide employment and release over 100 sq km of land blocked by mining.
- Mining caps. Since minerals are depleting assets, they can be mined only once.
- We recommend a mining cap of 1/200th of the proven reserves. This ensures that the opportunity to extract the mineral lasts for at least 7 generations of Goans.
- On environmental grounds, we recommend a starting cap of 5 million tons per annum, with the ability to raise and lower based on performance vis-à-vis meeting all environmental parameters
At these caps, mining can take place in one or two somewhat larger mines. We can reduce the overall environmental and other damage by concentrating operations. We can control mining much better.
- All mining must be done by the Goa Government with the goal of achieving Zero Loss and zero waste mining. We must receive the full value of our mineral wealth. No other structure can ensure zero loss under the present legal framework. Any loss is a loss to everyone equally, effectively a per-head tax, highly regressive.
- We must complete dump mining first in order to release space and reduce environmental hazards before any new mining takes place. It is estimated that of the 764 million tons of dumps, 20% or 153 million tons are saleable (~Rs. 15,000 crores). These must be sold.
- Permanent Fund. We must bring legislation to ensure that:
- We must deposit all money from the miningof all minerals into the Permanent Fund. It must be renamed GoenchiMati Permanent Fund to ensure it covers all minerals.
- The goal of the Permanent Fund would be to ensure maximum long term returns in excess of inflation.Wemust ensure that the Permanent Fund scores over 95/100 points in the best global standards (Santiago Principles).
- We must distribute a Citizen’s Dividend to the people of Goa from the after-inflation income of the Permanent Fund. The first Citizen’s Dividend will be given when it can amount to at least Rs. 100 per person, and thereafter annually or more frequently.
- We must implement a new control system and radical transparency so that the owners of minerals, the people of Goa can keep a watch on their children’s inheritance.
Creates core competencies
Goa has an opportunity to create world-leading skills in some areas (a) Mine closure and reuse; (b) River and field desilting; (c) Aquifer repair; (d) zero waste mining – segregation of associated minerals from dumps; (e) Applications on top of open data; (f) Managing Future Generations Funds; (g) Mineral supply chain control systems; (h) Participatory planning & budgeting for DMFs and (h) Implementing intergenerational equity.
A number of other opportunities open up as well. Goa can specialize in (a) Biopharmaceutical research and manufacturing, based on our biodiversity and clean water; (b) Agriculture based on local varieties, which supplies into (c) Culinary Arts, celebrating the diversity of food in Goa, and (d) Low footprint eco-tourism.
Boost to Goans and Goa
There have been extensive discussions around the feasibility of a Universal Basic Income in India. The benefits of a UBI are many – direct welfare benefits like improved health or education outcomes, equity effects as the same money helps the disadvantaged more, freedom effects as it acts as insurance or for paying off debt, and economic benefits. Economic benefits include increased entrepreneurship in villages due to the regular inflow of cash and lower migration to cities as a result. The Citizen’s Dividend paid from the permanent fund is a Universal Basic Income.
The ongoing corruption from mining is a huge drag on the economy. World Bank research shows good governance leads to a 300% increase in per capita income in the long term. Most of our large scams have dealt with natural resources. The corruption is leading to political capture and poor governance. It is also behind much of our environmental issues. The principles we are advocating will make a significant dent of corruption, which is sorely needed.
This is the future Goa needs.