Hard going for India despite mining ban lift

India’s supreme court has reopened Goa for iron ore mining after an 18-month ban, but it has also introduced restrictions and red tape that could delay the key industry’s resuscitation even longer.

The 18-month mining ban has had a huge effect on Goa’s economy and the livelihoods of tens of thousands of workers. Above, an iron ore mine in Goa’s Codli village. Krishna Das / Reuters

The lifting of a year-and-a-half iron ore mining ban in Goa, announced by India’s supreme court on Monday, should have come as a huge relief and cause for celebration for mining companies operating in the state.

The ban has had a huge effect on the state’s economy and the livelihoods of tens of thousands of workers.

But Haresh Melwani, a mine owner in Goa, explains that he was far from happy when he heard the details of the court’s decision.

“I felt very sad,” he says. “I was in Delhi and I was in the court listening to that sentence.”

At the same time as it eased the ban – put in place in an effort to curb rampant illegal mining – the court ruled that all leases in Goa had expired in November 2007. That means mining companies now have to set about trying to secure fresh leases, and that nearly all iron ore miners in the state had been operating illegally after that date, according to the order. This came as something of a shock to mining firms.

“This interpretation has come only now. Only now we are aware we should not have operated,” Mr Melwani explainsat his office in Goa’s capital Panaji, with a collection of toy model bulldozers on display behind him alongside family photos.

The industry is concerned about how long it will be before it can resume mining activity, with a lack of clarity so far from the state government on how miners can secure fresh leases and worries that this process could take an extended period of time. Clearances are needed from various departments, including the ministry of environment and forests.

“There are mixed reactions [to the supreme court’s decision],” says Prasanna Acharya, the director of the state government’s mines and geology department in Goa. “Leaseholders are not happy. Industry is not happy because their leases have been cancelled. They have to start from scratch.”

One mining company executive, who spoke on condition of anonymity, said he thought it could take two years to secure a new lease and resume activity. “Basically, we’re the biggest losers,” he said.

The closure of the US$4 billion Goan iron ore mining industry has affected one in every three Goans, according to a report compiled by the industry. The state has lost 35 per cent of its revenues since the ban, and the loss of foreign-exchange earnings also contributes to India’s wide current-account deficit, the report states.

Goa is best known for its palm-fringed beaches and vibrant nightlife, with tourism being its biggest generator of revenue. But its soils are endowed with rich mineral deposits, which allowed Goa to become India’s largest exporter of iron ore at a time when demand was booming in China for steel production. This made iron ore mining the second-biggest contributor to Goa’s economy.

The sector’s rapid growth, however, led to a ban on the mining and export of iron ore in October 2012 by the supreme court because of concerns about illegal activity in the sector. According to a report compiled by the Shah Commission of Inquiry on Goa’s mining industry, operators going beyond their boundaries and “unregulated” and “unrestricted” illegal mining resulted in 350bn rupees (Dh21.2bn) of losses to the state, along with environmental destruction.

Following the latest development, Mr Acharya was uncertain on when mining would actually resume.

“That’s the million-dollar question,” he says, adding that with the four-month monsoon season starting in June, when mining normally ceases anyway, activity cannot really start in the coming months. “Maybe late this year or early next season. They have to put all they systems in place, all environmental clearances. If it is new fresh grants, they have to go for all the clearances again. From our side it won’t take much time, but environment, forests and other clearances will take some time.”

Christopher Fonseca, the general secretary of the Goa branch of the All India Trade Union Congress, which is affiliated with the Communist Party of India, says that the decision to lift the ban is “better late than never” and that mining needs to restart as soon as possible because people have “suffered immensely in terms of Goa’s economy, livelihoods”. He estimates that 100,000 jobs in the state are generated the mining sector.

“We call upon the state government and the ministries, especially the ministry of environment and forests, to hit the road running in clearing up the entire thing and giving it a correct legal shape so the mining restarts immediately without much ado,” Mr Fonseca says. “They should take proactive and quick steps to mitigate the hardships of the people and see that the mining is done in a legal manner.

“Many of the mine owners have resorted to layoffs or are paying 50 per cent salary. They should now ensure that the workers are paid full wages and those who they have sacked or retrenched are taken back with continuity of service.”

The supreme court has put a cap of 20 million tonnes on the amount of iron ore that should be excavated annually, which is less than half of what was being mined before. The cap should be much higher, Mr Fonseca argues, because there has been a mining drought for so long.

He also believes that the state should play a bigger role in the sector to gain a bigger share of revenues.

“There should be a public-sector state-owned mineral ore development corporation,” Mr Fonseca says. “It will be owned by the people, so the benefits and the profits of this trading of minerals – mining, excavation and sale – will go to the people. These are finite, exhaustible minerals and they cannot be replenished. Of course, everything has to be done in a proper way. We have already seen the worst. We do not want this mining closure to revisit us again.”

Among the many livelihoods affected are those of the barge and lorry owners who invested heavily in vehicles to transport the iron ore when the industry was booming, often funded by bank loans. The majority of those barges and lorries have been sitting idle since the ban.

Atul Jadhav, the president of Goa Barge Owners’ Association, represents more than 100 barge owners, who had about 300 barges before the industry’s closure. There were about 6,000 workers employed on these barges, many of whom “were retrenched”, he says.

“Because of the ban on mining, 26 barges of ours have been sold outside of Goa and 12 barges have been scrapped because there was no business,” Mr Jadhav says. He says that loans on barges in Goa add up to more than 3bn rupees.

“We are not repaying the loans. The banks are upset. “We are not able to pay the interest also. All the loans have been declared as non-performing assets. We have requested the state government to take over the loans from the banks so the banks have promised to waive the interest.”

Mr Melwani is worried that it could take another three years for mining to get fully under way in Goa once again, adding that this issue has negative implications for India’s attraction as a destination for investment, as well as affecting him personally.

“I love mining,” he says. “I know only mining and I can’t even imagine myself doing anything else.”

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