Iron Ore Mining in Goa Faces Grave Situation

For the sins of companies owning iron ore mines in Goa and the acts of omission and commission by the state government, people directly engaged in extraction of ore and in related activities such as its transportation by trucks and barges, are paying dearly. This has happened in a state where the unemployment rate ahead of the Supreme Court ordered blanket cancellation of all the 88 iron ore leases leading to stoppage of mining effective March 16, was already high at close to 10 per cent. Of India’s 29 states, Goa happens to be the smallest with a population of 1.8 million plus.

A perusal of the Justice Shah Commission report gives an idea what grievously was going wrong year after year in Goa iron ore mining industry. This could happen only because the watchdog agencies of central and state governments decided to look the other way when as the report pointed out the mining groups were indulging in extracting ore well in excess of approved production limit, the state government and directorate of mining and geology allowed operation of mining leases for which applications were made for renewal but without environment and forest clearances and large quantities of ore were taken out of mine sites without payment of royalty.

The Commission finding that over the years, exports of iron ore from Goa had been well in excess of officially recorded production left everyone in shock. What, according to the Commission, aided “illegal mining and illegal export, that is, without payment of royalty or misuse of belated royalty payment for ore already exported (sometimes 2 to 3 years later)” was the absence of a “system.”  Equally gravely, miners would often pay royalty for ore mined outside the lease area with impunity. It further pointed out that in the absence of transit pass system, illegally mined ore in Karnataka found its way to the world market through Goa.

The abandon with which the miners in Goa went about their job without caring a bit for the laws governing mining was made possible by a highly indulgent state government and concerned central agencies. On Goa iron ore exports, the commission had to disparagingly say: “The maintenance of data in Customs department… is very poor. The chief commissioner of Customs should take note of it.”

All the mining irregularities in Goa and Karnataka leading to major revenue losses to the exchequer and grave damages to the environment and health of the population in mining centres came to light because of sustained campaign by NGOs. Fighting many odds, including vicious insinuations such as fronting for foreign business interests, the NGOs finally stood vindicated by the Supreme Court putting a ban on iron ore mining first in Karnataka in July 2011 and then in October 2012 in Goa. As for Karnataka, the court was upset with the state government’s lackadaisical moves to put a stop to the fast spreading mining mess. The court subsequently put a stop to functioning of 90 mines in Goa principally on the basis of Shah commission findings that large scale illegal mining over 12 years caused a revenue loss of around ₹35,000 crore to the exchequer.

Ore mined in Goa has iron (fe) content of 58 per cent or below for which there ever is hardly any demand within the country. A few local sponge iron and pig iron units will use a small portion of iron ore production by mines in Goa. Throwing all caution to the wind, Goa miners at the cost of causing damage to the environment went on raising production at rapid rates from about 15m tonnes in 2000-01 to over 38m tonnes in 2010-11. The uncommonly big jump in production in a fragile ecosystem was in response to surging Chinese demand for iron ore. China where the steel making capacity is over 1bn tonnes was then a ready buyer for what would be on offer from Goa. Steelmakers in China would import low fe bearing ore from Goa in growing quantities for either sintering or beneficiation for use in their blast furnaces for steelmaking.

Come April 2014, the court based on its appointed expert committee recommendation allowed the Goa iron ore mines to resume production but with an annual cap of 20m tonnes, way lower than the 2010-11 peak output. After a detailed study of the available infrastructure in Goa that could support evacuation of ore from the mines and its transportation through roads to the barges and finally to ships for export, the committee thought production needed to be capped at 20m tonnes. Finally, the message has come loud and clear that unless something concrete was done about strengthening the infrastructure in which the industry and state government were required to pull resources, there was no possibility of the court resetting the cap to miners’ advantage. In recent times, industry officials started claiming that significant improvements had been brought about in infrastructure that could support annual production of 30m tonnes. The claims had endorsement of the state administration.

But as the industry campaign for production enhancement was gathering strength, the Supreme Court found reason to cancel all the 88 iron ore leases by an order of February 7 with a direction that mining operation must cease with effect from March 16. The court was constrained to give the order as it found the state government renewing the leases earlier was in “violation of law.” It gave direction to the state government that fresh mining leases are to be awarded only through auction as is laid down in the Mines and Minerals Development and Regulation Amendment Act, 2015. Lease awards through fresh auction alone will not lead to mines reopening. For that to happen, the new lease owners will have to secure environmental clearances.

The mines in Goa remaining idle for over seven months have reduced 60,000 people in direct employment in the industry and another about 250,000 people in supporting activities such as truck and barge operation to penury. The government headed by Manohar Parrikar is as a result coming under increasing pressure to find ways to reopen the mines. On the basis of annual production of 20m tonnes, the annual loss of revenue to the state government is ₹1,477 crore and another ₹612 crore to the centre. According to the Goa Mineral Ore Exporters Association, reopening of mines through the auction route and seeking forest clearances afresh will take about five years. Instead, the country’s Parliament should make suitable amendments to the laws that govern mining.

Here history needs to be recounted. When Goa was under Portuguese occupation, iron ore mining leases were granted as perpetual concessions. New Delhi converted these into mining leases under the 1987 Abolition Act but with retrospective effect from December 12, 1961 coinciding with the liberation of Goa by Indian army. MMDRAA says leases granted ahead of it in 2015 will have a validity of 50 years from the point of their grant. The suggested amendments to Abolition Act and MMDRAA are intended to give effect to the leases coinciding with 1987 and not December 1961. Mines leases will then get extended automatically to 2037 to the relief of all stakeholders. Of the country’s 33bn tonnes of iron ore resources and reserves, the share of Goa is 1.4bn tonnes. Let the Goa mines reopen. But mining must be done according to the laws without harming the environment.



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