Over the last ten years mining losses have been variously reported and unsubstantiated estimates touted. In among all of this, one thing is certain: the trend is consistently upwards. Amounts have been quoted from Rs. 3,500 crores due to non-payment of royalty (PAC Report) to Rs. 35,000 crores due to mining outside lease areas (Shah Commission). However the latest official calculation from Goa Foundation has established the legally recoverable amount stands at an incredible Rs. 65,000 crores . . . and counting. This latest sum follows the 2014 Supreme Court landmark judgement in the Goa Mining case filed by Goa Foundation. To put it in perspective, this latest jaw-dropping figure equates to six years of the entire revenues of Goa government!
This is the fourth part of a series. Read the other parts here
What was the Goa Mining Case about?
To understand how we got to this position we need to trace a little history.
The legal challenge
The Goa Mining Case was a Public Interest Litigation (WP 435 of 2012) originally filed in September 2012 by Goa Foundation (GF) against the Union of India, State of Goa, Ministry of Mines, Indian Bureau of Mines, and Goa State Pollution Control Board. It was formulated as follows:
Writ Petition under Article 32 of the Constitution of India:
‘ . . . in the wake of the continuing illegal mining in the State of Goa in complete and flagrant violation of statutory norms, which not only raises issues of serious concerns about the adverse and irreparable damage caused to the ecology and degradation of environment in the State, but also on issues concerning transparency and accountability in the functioning of the Government’
Fundamental to the case were the mining illegalities and abuses previously exposed by the report of the Public Accounts Committee of the Goa State Legislature (headed by Manohar Parrikar) and the national Commission of Enquiry headed by retired Justice Shah.
Even subsequent to the Shah Commission’s findings, system-wide abuse continued. These abuses were listed in the petition. The main accusations levelled at each of the authorities were details of consistent flagrant misconduct, and abuse of power in support of illegal mining.
More than twenty scientific studies clearly demonstrating the negative impact of mining on the environment, economy, health and social fabric of Goa were brought into evidence.
GF provided calculations of the losses due to illegal mining and specified the amounts to be recovered. These figures resulted from detailed investigations into the annual reports of Sesa Goa (now Vedanta India) along with data from the Industry body, Goa Mineral Ore Exporters Association (GMOEA).
The Goa Mining Case introduced crucial elements of constitutional law to support the ‘Intergenerational Equity’ principle that minerals are the inheritance of future generations, that the income from these belongs to the community as custodians and that the state is appointed as trustee on their behalf.
What happened in the Supreme Court
At the first hearing on 5th October, 2012, the Supreme Court immediately stopped all mining and transportation in Goa. The Central Empowered Committee (CEC) was asked to examine the allegations of the Shah Committee and to file a report with the Supreme Court.
The CEC filed its interim report on the 7th December 2012. It reported
“The mining operations in Goa have violated with impunity the relevant Acts, Rules and Regulations and orders of this Hon’ble Court.”
“A very large number of mining leases were being operated by persons other than the lessees and in flagrant violation of the provisions of the MCR, 1960 and in all probability with the tacit approval of the State Government. Based on the unregistered and dubious General Power of Attorneys and other documents, the mining lease have been allowed to be operated by persons having clout by treating the leases granted to individual persons as those granted to partnership firms and the inclusion of such persons as partners in the firms (and retirement of the genuine lease holders).”
Over the course of 2013, the Supreme Court heard the Goa Mining Case. The Goa Government filed a number of affidavits stating it would:
1. commission investigative auditing of the returns filed by the mining companies and traders for past 10 years by a panel of Chartered Accountants.
2. appoint the six-member High Powered Justice RMS Khandepar Committee to look into the allegations of the Shah Commission.
3. carry out CBI enquiry into the matters mentioned in the PAC Report.
4. refer the issue of illegal mining to an independent investigative agency such as CBI/Lokayukta.
5. take all necessary measures within the framework of the Act and Rules to recover maximum amounts from the wrong doers.
6. confiscate dumps which are situated in forest lands and auction them.
7. terminate all raising and other contracts in violation of Rule 37 of MCR 1960.
8. auction of leasehold rights as per Act and Rules if Act and Rules were suitably amended.
9. appoint 435 staff on lines of Excise Department to be deployed as Mines Inspectors and so forth at mine heads, jetties, stockyards and check posts.
The Supreme Court hearings culminated with the order on 11th November 2013 establishing the Monitoring Committee for e-Auctions of ore that was ready for sale, and establishing the Expert Committee on a Cap on mining on grounds of Intergenerational Equity and Sustainable development. The case was also reserved for judgement.
What did the Supreme Court rule about mining?
The landmark case judgement was delivered on the 21st April, 2014. It contained a number of important recommendations and critical decisions:
1. All mining after 22nd November 2007 was declared illegal. Mining finally stopped on the 10th September 2012, nearly 5 years later.
- Mining restart would require fresh leases and fresh ECs
- Fifteen million tons of extracted iron ore was deemed the property of the state, and ordered to be e-auctioned under the supervision of the Monitoring Committee appointed by the Supreme Court
2. The Shah Commission did not give miners a proper hearing. Hence, Goa government to investigate the allegations and prosecute.
- Dumps outside mining lease areas were declared illegal
- The state was directed to initiate action against violations of Rule 37 (Raising contracts, transfer of leases) and Rule 38 (Amalgamation of leases)
3. An interim cap was set of 20 mtpa. The Expert Committee was given:
- six months to submit its report on how to deal with mining dumps (due 20th October 2014)
- twelve months to submit its final report (due 20th April 2015) on annual excavation cap amounts.
4. The Goa Iron Ore Permanent Fund was established on grounds of intergenerational equity and sustainable development. Mining lessees of iron ore were directed that they would henceforth have to pay 10% of the sale price of the iron ore sold by them to the Goan Iron Ore Permanent Fund.
- The Goa government was given six months to frame a comprehensive scheme with regard to the Goan Iron Ore Permanent Fund in consultation with the CEC for sustainable development and intergenerational equity
A big win for the people and future generations of Goa
The Supreme Court judgement was revolutionary. It gave Goa a clean slate – no mining leases, no vested interests. Huge amounts of money were deemed recoverable and large amounts of money were immediately made available to the government.
The other critical aspect was the Goa Iron Ore Permanent Fund designed to ensure the value of the iron ore that is extracted is saved for our children and future generations. This is the very first Permanent Fund in India, bringing us on par with Norway, Alaska, Chile and China. It was also the first Permanent Fund to be created by judicial action – a global judicial precedent and a very proud moment for Goa.
Economically the picture is positive:
Nine days after the judgement, Goa Foundation wrote to the Chief Secretary of Goa with an estimate of the amount recoverable on account of the illegal mining undertaken from November 2007. Goa Foundation wrote again on 11th December 2014 on the same issue. The conservative estimate of mining revenue losses was updated to Rs. 65,058 crores, on account of the ore under Section 21(5) of the MMDR Act. Additionally, interest @ 24% specified under Rule 64A was now applied up to 31st March 2014. This latter added a further Rs. 53,603 crores.
‘Conservatively, the total amount recoverable is thus Rs. 118,661 crores. This works out to Rs. 8,13,560 per person. The total amount is approximately the Goa Government budget for 10 years. If invested sensibly in the Goan Iron Ore Permanent Fund, this massive amount could easily earn the State a real return of 3%. This amount itself works out to Rs. 3,560 crores per annum in real terms, available indefinitely. We can easily solve the problems of the mining impacted persons. ’
Extract from the Goa Foundation Letter
to The Chief Secretary, Government of Goa, 11th December 2014
However even these calculations are conservative estimates and don’t include the following elements:
1. Recoveries on account of illegal mining after April 2012
2. Recoveries on account of domestic sales
3. Under-invoicing as set out in the Shah Commission Report Part 3, on Goa mining
4. Condonation cases mined, as set out in the Shah Commission Report
5. Mining outside lease boundaries, which according to the Shah Commission amounts to Rs.35,000 crores.
The overall economic position is tabled below:
|Benefit from Goa Mining Case|
|1. Recoverable from illegal mining||
|Assets that can be sold relatively easily|
|2. Ore (15 mt) being e-auctioned||
|3. Dumps (764 mt) – 20% saleable – 153 mt||
|Compare with: Royalty received by state government|
|1. For the 8 year period 2004-2012 – 282 mt exports||
|2. Since the restart of mining (2015-16) – 10 mt||
|3. State revenue receipts 2015-16 (RE)||
|4. State debt as on 31-Mar-2015||
|5. Spend on mining dependent||
Despite the large amounts available, the Goa government has persisted in squeezing the mining dependents. Why? So that they demand an immediate restart of mining in desperation instead of rational mining in consideration of our moral duty towards our children.
Where do we go from here?
Ultimately the people of Goa have a moral and practical responsibility for the shared custodianship of their wealth. The structure of a permanent fund under the leadership of GMM will create a foundation for the future, but we must remember that we are all united in this obligation and must be vigilant. Let’s learn the lessons of the past and build us a better future. Let’s build caring communities and preserve our inherited common wealth for future generations.
“evil prospers when good men do nothing”
Minerals represent wealth owned in common: If we are ignorant about our commons and don’t take ownership – someone else will.
Mineral receipts are easy money: Easy money leads to a lack of accountability, which results in unresponsive and uncaring governance.
Miners collude with politicians: Natural resource corruption and scams are the largest and most notorious.
Mining is the largest source of political funding and financial corruption: Politicians have become miners and miners became politicians.
Over-reliance on easy money is ruinous: Resource wealth and the reliance on easy money ultimately result in deterioration of industry, agriculture and tourism creating a destructive cycle of ‘boom and bust’, crises of governance, interpersonal conflict and even civil wars.
As all leases had expired, Goa had a clean slate. A fresh start could be made in all aspects of mining and mining controls. However, any such start must consider the state finances, the mining dependents, the mining affected, the people of Goa and the future generations of Goa. How does their picture look? How important is mining for Goa? How important is mining for state finances? How many people are dependent on mining and to what extent? How many people are affected by mining and to what extent?
This is the fourth part of a series. Read the other parts here
By Sarah Dynah McGinnis