On March 15, all mining activity in Goa, involving iron ore extraction, came to a halt for the second time in nearly two years. This follows the Supreme Court’s order on February 7, cancelling 88 iron ore mining leases in the State that were renewed by the government in 2014-2015 just before the Mines and Minerals (Regulation and Development) Act mandated the auction of leases.
What will be the impact?
Leaseholders are disappointed. All others dependent on mining, including miners and truckers, in seven taluks of the mining belt and those associated with the port town of Mormugao-Vasco are protesting, holding life to ransom. The State government, along with the Centre, is exploring the possibilities of creating some economic activity for those dependent on mining by approaching the court with pleas, for instance, to allow e-auctioning of ore dumps lying in lease areas.
The ban was a big blow to the BJP-led government of Manohar Parrikar — who is being treated for a serious pancreatitis-related ailment in a U.S. hospital — as it was hoping that mining activity would start once again with vigour, ailing as it was since the total ban on the sector in October 2012 due to illegal mining.
Why is production low?
On October 5, 2012, the court banned mining and ore exports, which was partially lifted in April 2014. But poor international ore pricing and issues of environmental clearance have not allowed mining to reach the annual cap of 20 million tonnes, prescribed by the Supreme Court. At the end of the current fiscal, Goa extracted 10 million tonnes of ore, according to the State Directorate of Mines.
In 2014-2015, the then BJP-led coalition government, under Mr. Parrikar and subsequently under Laxmikant Parsekar, had renewed for the second time the leases of these mining companies for 20 years with retrospective effect from 2007. The Supreme Court termed the renewal “hasty and illegal” on a petition filed by the Goa Foundation that challenged it.
Why was it banned?
It all began with the then Congress Chief Minister, Digambar Kamat, being indicted by a judicial commission for allowing illegal mining, resulting in amassing of wealth by certain individuals and companies at the cost of the environment. The Justice M.B. Shah Commission’s report, tabled in Parliament by the United Progressive Alliance government, cited instances of abuse of power by Mr. Kamat, who held the Mines portfolio for 12 years from 2002 in three governments, two headed by the Congress and one by the BJP.
The commission found “total lack of coordination” in different wings of the Ministry of Environment and Forests (MoEF), which “resulted in illegalities and consequential ecological damage.” The commission estimated the loss to the State exchequer at ₹35,000 crore.
How did it affect revenues?
For two consecutive years, the Goa government, in its annual budgets, conceded that around 20% of its GDP had declined because of mining. This time Mr. Parrikar tried to downplay the impact of the temporary closure, but conceded the adverse impact on those dependent on mining.
Goa, with its low-grade ore, used to export around 20-25 million tonnes a year. However, post-2000, demand soared for steel ahead of the 2004 Olympics, and Goa’s mining sector became a free-for-all activity. Apart from traditional miners, influential politicians, traders and others joined the race to “make a fast buck” and mining became unregulated. So much so that just ahead of the previous Supreme Court ban, the State exported a record 54 million tonnes of iron ore.
What lies in store?
The Goa Foundation filed a complaint with the Lokayukta on Friday, demanding a probe into the renewal of leases. In the absence of Mr. Parrikar, Union Minister for Shipping Nitin Gadkari, the BJP’s Goa in-charge, last week admitted that auctioning of leases was the only option. But as that will take nearly a year, the government has approached three senior lawyers in Delhi seeking their opinion on the verdict.