Treat minerals as family gold, protect rights of children and future generations in mining areas

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A Goa Foundation  note to the RK Rao committee, set up to formulate new national mineral policy:

The 2015 Amendments to the Mining Regulations (MMDR Act) continue to facilitate the single largest transfer of wealth from the general public to the rich folks of this country. The new Mineral Policy should treat minerals as family gold and the Rao Committee should recommend further amendments to protect the rights of our children and future generations.

The Goa Foundation (GF) from Goa met with the KR Rao Committee, which has been set up to formulate a new National Mineral Policy, in view of directions issued by the Supreme Court of India in its judgement on the Odisha mining industry. The GF was requested by the Committee to depose before it today.

The GF pointed out to the Committee that mineral resources are a shared inheritance or asset, very much akin to our family gold. We are merely custodians of these resources on behalf of our children. If we have them to extract today, it is largely because our ancestors did not exploit them. Unfortunately, the existing mineral laws and the existing mineral policy are both resulting in encouraging depletion of these collectively owned assets and endowments on a phenomenal scale, with the owners receiving a pittance. Further, these are leading to even greater disparities in wealth which is unconstitutional.

The Goa Foundation feels that this is a cause that needs to be addressed urgently as it has far reaching impacts on the trajectory of our national economy. For example in Goa, over eight years of mining (2002-2012), the public exchequer received less than 5% of the net value (economic rent) of our minerals. The loss was around twice the amount of the state’s revenues over the same period. Per household losses were greater than assets owned by such households. Had this amount been saved instead, the income generated could have eliminated poverty. Instead, everyone lost equally, and a few became rich enough to corrupt our democracy and violate every possible law.

In 2014, the GF won a Supreme Court judgment that ended up declaring the last 5 years of active mining in Goa (2007 to 2012) as fully illegal. The amount recoverable from the illegal miners was estimated by the GF at Rs. 65,058 crores, which amounts to Rs. 4.5 lakhs per person in Goa today. Instead of recovering this amount, the government, under the influence of a powerful mining lobby, hurriedly renewed existing leases before the MMDR 2015 Amendment came into force and required auctions. These renewals led to a further loss of Rs. 79,000 crores. In effect, each resident of Goa lost Rs. 10 lakhs each.

The 2015 MMDR Amendments — which require leases to be granted only through auctions — improve the situation somewhat. Auction premia are already averaging 3 times the existing royalty and other charges. Unfortunately, the same MMDR Amendments also extended existing leases, in effect giving up the potential to receive 3 times the royalty in those cases. In Goa alone, while the renewal of 89 leases led to enormous losses, the MMDR Amendment (2015) extended 188 other leases till 2020. The MMDR Amendments hence facilitated the single largest transfer of wealth ever from the people of the country to miners. This despite several Supreme Court judgements.

Our deeper objections are that even the trifles we receive are treated as income and spent. It is almost as if the present generation is wholly comprised of gamblers who are engaged in distress sales of our family gold, and thereafter frittering away the inheritance. After the present scale of mining exhausts mineral ores, the next generation (forget about all future ones) will have neither ore nor the cash saved from sale of the ore. Do we have the right to consume the planet and leave nothing for the millions of our future descendants? These are the issues GF raised before the Dr Rao Committee.

India’s largest scams today have all revolved around natural resources. As the rich get richer in a rigged game, they subvert all laws and buy our democracy. The enormous wealth at stake drives rapid extraction, and encourages corruption.  The rest of us — the weak, which includes trees, tigers, tribals, and our children — are mere obstacles between the powerful and greater wealth.

Sumana Nandi, representing the next generation, told the Committee: “We must institute fair mining. The present generation cannot exhaust and sell all our minerals. The future generations have a right to the mineral wealth, and the value of what is extracted today must be saved for the next generations in a Future Generations Fund. Let the money earned from these deposits be distributed to the people equally as owners. This will bring about the future we the youth of India need. With the review of the National Mineral Policy along these lines, we can make this a reality.”

GF asked the Committee to include some key principles in the new mineral policy: (a) treat minerals as our family assets or gold, (b) conservation of minerals must include conserving the value of the minerals; (c) mineral development to include zero waste mining; (d) adopt zero loss mining as an explicit target of the policy; (e) save all mineral receipts – royalty and auction premium — in Future Generations Funds and distribute income from such Funds to all citizens of the state as a commons dividend; (f) caps on mining extraction on environment protection grounds and to ensure access to minerals (and job opportunities) for future generations; (g) best-in-class and state of the art controls; (h) radical transparency; (i) active local control over mining, and (j) restructuring the mines ministry at the center and states to ensure these departments actively work to safeguard our shared family assets represented in these minerals.

GF points out that the Economic Survey 2016-17 Part 1 page 297 Box 1 (http://bit.ly/2wQP8cm) has come to a similar conclusion. This is the future we need.

In addition, GF also requested the Dr Rao Committee to provide estimates of the losses in future from existing leases due to the lease extensions, and for the Center to compensate the states. The judgment in the Odisha mining case makes it clear that mining without an EC or in violation of the EC or mining plan is illegal mining. GF asked the Committee to recommend a rapid study of all mineral leases, based on statutory reports filed by mining lessees already with the IBM, of the illegal mining since 2000 across India. Illegal mining is nothing but theft. Under the law, the full value of the mineral illegally mined is recoverable as compensation. This must be recovered, and deposited into the Future Generations Funds.

Claude Alvares, Secretary, GF, said: “The rampant extraction and squandering of our mineral wealth is one of the root causes of many of our troubles – our environmental crisis, our corruption crisis, our civil wars particularly in tribal regions. Our democracy is being stolen. Will we leave only ashes for the future? The KR Rao Committee can change the course of Indian history, even world history. We hope the Committee does the right thing and thereby aspires to be remembered for this forever.”

*Click HERE for full text of the GF representation on new National Mineral Policy 

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