Goa’s Inglorious Past: The Great Mining Swindle

Zero loss mining and intergenerational equity

A loss amounting to twice the cumulative state revenues was uncovered following an investigation into mining activities by Goa Foundation. This money represents the value of minerals mined and exported during the period 2004 to 2012 from Goa. The amount represents a Rs. 3.7 Lakhs loss of mineral assets for each and every Goan; minerals that we inherited and to be passed on to our children.

This is the second part of a series.  Read the other parts here

How is it possible that the state could have lost this massive sum of money and for this to go unreported? In addition, how can those in power have handed over our inheritance to the mining company which amounted to more than the cumulative state revenues?

Who is the architect of this ‘great mining swindle’? How can we resolve to recover this money? What is zero loss mining and how can we implement this to protect us from this type of criminal theft in the future?

The last ten years have witnessed radical changes to mining practices in Goa. These changes contrast with the methods historically used to extract our rich Goan mineral resources. The latter half of last century saw the emergence of steady, long-term relationships with Japan and other nations that benefited employment while at the same time creating welcome foreign exchange. This consistent and balanced approach to mineral extraction helped insulate Goa against technological advances, mechanisation and the inevitable cycles of ‘boom and bust’, that were features of the late 1970s and early 1990s economic climate.

In stark contrast to the historic approach, the last ten years have seen a major shift from the established pattern of long-term contractual supply, to ‘spot pricing’, in particular of iron ore. This change to the method of pricing developed mainly as a response to demand from China. As a consequence of this shift a mining frenzy ensued, resulting in what can best be described as a free-for-all. Fuelled by increased iron ore values, profiteering soared and greedy mining company bosses ensured that prices were matched on the ground by accelerated of levels of extraction and unlicensed activity.

Criminal levels of profiteering by out-of-control mining companies was not exclusively a Goan phenomenon. In 2010 an urgent inquiry was launched under Justice M.B. Shah, to investigate mining malpractices across three states. In 2011 the Public Accounts Committee (PAC) of the Goa Legislative Assembly, under the chairmanship of the then leader of the opposition, Manohar Parrikar of the BJP, likewise submitted a report into mining activity.

A shocking catalogue of offences concerning the illegal siphoning of Goa’s natural resources was uncovered. Crony capitalism and systemic corruption abounded. A complex and sickening catalogue of theft against the community-owned land assets and the people of Goa was exposed.

in 2012 the Shah Commission stated “…. illegal acts can’t happen without connivance of the politicians, bureaucrats and lessees. There is a complete collapse of the system.

Not only did this scandal involve India’s richest, most powerful, feudal and dynastic mining bosses, but the PAC Report charged the department of mines, the pollution control board, the forest department, the police, the ministry of environment and forests, the Indian Bureau of Mines and the Director General of Mines Safety with systemic corruption and collusion in illegal mining.

Rs 3,500 crores ‘lost’ by the State of Goa!

Hugely significant among the many improprieties relating to illegal and excess extraction, was the scandalous finding that the state had somehow ‘lost’ Rs. 3,500 crores due to iron ore being exported without any form of royalty being paid. In truth this money was due not to the state, but to the true custodial and constitutionally legal owners of the Goan minerals; the people of Goa.

To what extent do these enormous figures ultimately translate into dilution of our community-owned assets? Our jointly and severally owned minerals and our intergenerational equity?

Goa Foundation conducted an analysis of the audited financial statements of Sesa Goa along with volumetric data from the industry body, GMOEA, for an eight-year period (2004-2012). They discovered that during this period, the state of Goa exported Rs. 87,748 crores of iron ore.

They then calculated what would be a generous and realistic estimate of average extraction costs. This figure amounted to Rs. 33,914 crores, inclusive of a generous allowance of 20% post-tax return on the capital employed for the miners.

As a result, Rs. 53,833 crores is a conservative estimate of the value of the community-owned mineral assets prior to extraction. This amount is the estimated value of the jointly owned mineral assets that had been extracted, and which ultimately belongs to the future generations of Goa.

Over this same period the state of Goa received a paltry Rs. 2,387 crores from the total amount. Even this token amount was treated by the state as ‘revenue’ and frittered away, not saved.

‘Over an 8 year period, we lost Rs. 3.7 lakhs per capita
from the mineral commons, effectively a per head tax,’
The Goenchi Mati Movement

95-loss-stacked-bar-chart

In simple terms:
• The state lost over 95% of the value of the mineral
• The loss was twice the total state revenues for that same period
• The extra after tax profit of the miners amounted to more than the state revenues!

The loss to our future generations is absolute. How will we explain it to them? In effect it is a per-head tax of Rs. 3.7 lakhs (28% of GSDP for 8 years). Every man, woman and child in Goa lost Rs. 3.7 lakhs, and a few became rich. This is not ‘trickle down’ economics, it is looting economics. Quite simply, it’s a graphic and despicable case of theft and one that violates the rule of law, “socialism”, equality, the right to life and the common good aspects of the Constitution. Is this ethical? Is this just? Is this right? Is this moral? Is this fair?

who-wants-mining-and-why-chart

Essentially, mining involves the sale of our shared inherited minerals. We have a responsibility to ensure that the full value of all mineral receipts are treated as capital receipts and invested in new, equal and permanent assets. This is on account of the capital being generated and due from the sale of our inherited assets.

The Goenchi Mati Movement is advocating a system that would ensure that the entire value of our minerals be captured and transformed into common inherited asset (a permanent endowment fund), with any income distributed to all as a Citizen’s Dividend, thus preserving the original, inflation-adjusted value of the asset. Had Goa followed these principles, each man woman and child could have received Rs. 1,000 per month, inflation-adjusted and in perpetuity.

The Movement states that it is trying to save our children’s future. It advocates targeting Zero-Loss mining, the saving of all mineral receipts for our future generations in a Permanent Fund, and the distribution of the resultant income as a Citizen’s Dividend due to all Goans reflecting their right of ownership.

Zero-loss mining and intergenerational equity must be the objective of our community and our mining laws. We must start saving minerals or their value for our future generations, instead of burning them recklessly. We can have fair mining. We must have fair mining.

This is the second part of a series.  Read the other parts here

By Sarah Dynah McGinnis

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