Mumbai: Goa is staring into uncertainty as iron ore mining in the coastal state came to a halt in the state on Thursday, with its chief minister in absentia and the headless government unable to chart a course of action.
Chief minister Manohar Parrikar who left for medical treatment in the US on 8 March did not appoint a deputy chief minister to steer the government in his absence, but only named a three-member committee of ministers to manage daily affairs.
The Goa government in 2015 granted 88 mining leases which were renewed every year, but the Supreme Court on 7 February quashed all of them, following a petition filed by the Goa Foundation. The court also invalidated all environmental clearances issued by the centre, impacting other mines as well.
Ambar Timblo, president of the Goa Mineral Ore Exporters’ Association, said in a phone interview that the economic and social costs of a total mining ban were “disastrous for a small state like Goa".
“The financial cost on account of revenue loss and drying up of liquidity in the hands of people who are dependent on the sector account for a 20% cut in Goa’s modest gross domestic product (GDP). Considering that mining resumed in 2015 only after the previous Supreme Court-ordered ban, the latest ban adds lot of uncertainty to the sector. We don’t know what happens next," said Timblo, who is also managing director of Fomento Resources, one of the biggest miners in Goa.
The mining sector, apart from tourism, is a major employer in Goa for decades. According to the miners’ association, it directly and indirectly employs about 60,000 people, and its shutdown would impact nearly 200,000 people, including dependents.
On Wednesday, the three senior Goa ministers met and decided to urge the centre to file a review petition in the Supreme Court. However, according to a senior BJP minister, the ban would still take effect on 16 March.
What makes matters knottier for Goa is a 2015 amendment in the central mining law, mandating auctions unless the leases are renewed. This would pave the way for miners from outside the state, something neither the local miners nor legislators want. Over a phone a call with Mint, even Claude Alvares, founder of Goa Foundation that won the Supreme Court case, agreed with the general sentiment against “outsiders" in the state’s mining sector.
Alvares acknowledged the impact of the ban, but said the solution lies in sustainable mining under government control and regulations. “I agree with the legislators that auction of mines will bring in outsiders like JSW and Adani who do not have a good record in terms of sustainable mining. Auction means going back to the same set of people who have pushed Goa into this environmental catastrophe. Despite the Supreme Court ban in 2012, there has been little compliance and regulation because the government simply does not have the resources to regulate. The solution lies in sustainable and regulated mining under a government-owned entity like Goa Mineral Corporation (GMC). It is only Manohar Parrikar’s bias against public sector undertakings that stalls establishment of a body like GMC that could get around 11 government-owned mining entities on board for regulated mining," Alvares told Mint on the phone.
Timblo of Fomento Resources acknowledged the environmental concerns, but added that the overall credibility of the mining sector had suffered due to lack of a reliable business climate. “Environmental sustainability is fine and we all accept that. But without business sustainability, environmental sustainability becomes an academic achievement only," he said.
The association reckons that the ban would cause a loss of Rs3,400 crore annual revenue to the state and central government and to the people who are dependent on the sector —Rs1,000 crore from royalty, value added tax on diesel, and goods and services tax (GST) on other items, another Rs1,000 crore loss to over 12,000 trucks, 150 barges, and ancillary units, Rs1,200 crore loss to operators in excavation and drilling activity, and Rs200 crore on account of other losses.
“We have not factored in the administrative charges of employment of direct employees of mining companies and income tax payments to the government in this," says a letter sent by the association to the Prime Minister’s Office. It estimates that the mining sector contributes nearly 20% to the state GDP and the impact due to ban would be directly felt on the state economy.
In October 2012, the Supreme Court banned mining in Goa on the basis of the findings made by the Shah Commission which showed rampant environmental violations and excessive mining. In 2012 too, the Goa Foundation had filed a petition in the Supreme Court. The ban was lifted in April 2014 and the Supreme Court also capped annual extraction of iron ore at 20 million tonnes, in the backdrop of extraction reaching an alarming 25 million tonnes during some years before the ban. But actual mining resumed only in August 2015 as the miners had to seek fresh leases and environmental clearances.