MAC: Mines and Communities

Rethinking Mining

Published by MAC on 2006-06-24

Rethinking Mining

By V. M. de Malar, Goa Herald

24th June 2006

It happens right under our noses, but we barely understand what is involved or how high the stakes are. The numbers don't lie though; nearly 40 million tones of iron ore were hacked out from our precious hinterland last year – that's nearly half of the country's export total.

Given the steep hike in commodities prices in 2005 – largely fuelled by China's seemingly unstoppable growth – this trade adds up to well over two billion dollars in international sales generated by Goa alone. That's very big money and it piles up by the minute and hour; the mining companies earn close to forty crores each day in exports from Goa, and they're all looking to expand operations while the going remains good. Their profit margins virtually doubled last year, and there's a strong chance that prices will continue to rise all through the rest of the decade.

It's a classic supply and demand spiral. India is the world's third largest exporter of iron ore and particularly crucial in the supply chain to the neighboring Asian giant economies of China and Japan. Yet, India is now undergoing its own renaissance, complete with construction boom and manufacturing frenzy. All of this activity requires iron ore, and competition has led to steadily rising prices at home and abroad. The suppliers – in this case, Goa's mining license holders – are experiencing demand like never before, and rapidly escalating revenues. It's led to 24-hour loading of ships bound for the East, an unending line of waiting vessels on our horizon, and a ceaseless flow of barges down our rivers. Less visibly, of course, it has led to even hastier destruction of our environment and multiplication of all the health and social costs that follow.

Fittingly, as the mining exports scenario in India has dramatically changed in the last decade, the national government is planning a long-overdue and ambitious overhaul of the Mines and Minerals Act of 1957. It's part of the economic liberalization package initiated by Manmohan Singh, a planned dilution of the stringent "license raj". Earlier this week, government sources reported that the total revamp is intended to spur investment in this crucial sector, to massively lift output by limiting the amount of paperwork necessary to obtain a mining license. But any reworking of the outmoded act also offers broader opportunities than government and industry realizes –we should completely rethink and reconsider the costs and benefits of mining in a place like Goa. Because the status quo here is a very bad deal for everyone except the concession owners – the new regulatory framework should ensure that Goa gets much more from mining than it does now, the scam has gone on for far too long.

It would be hard to find a single place in the world that is worse served by the extraction industry than Goa. It is our environment that is wrecked, it is our health that suffers, it is our society that is torn up and it is our society that gets next to nothing out of the whole business. Billions of dollars, thousands of crores of rupees are amassed from our natural birthright, but almost every paisa of it disappears straight into the central government's coffers and into the ever-expanding pockets of the concession owners. The government talks mostly about tourism, we all tend to focus our attention to tourism, but what about mining?

Just yesterday, the newspapers quoted the Travel and Tourism Association of Goa's incoming president, Ralph de Souza proudly reporting that his industry contributes the most to the exchequer – 1500 crore rupees. But what about mining? What does it contribute?

The official panel appointed by the government, and headed by Anwarul Hoda of the Planning Commission will be reporting back with its recommendations, and appears intent on easing the license process. Ram Vilas Paswan, the Steel Minister, says that he's "very keen" to compdiletely overhaul the 1957 Act. That means it's time for the state government to assert itself on our behalf and ensure that the thoroughly rotten current system is not perpetuated. Goa must be fairly compensated for its mineral resources; we must not be cheated any longer.

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