dna edit: Ending excesses

The Supreme Court’s (SC) decision to lift the ban on iron ore mining in Goa is a fine balancing act between industry demands, livelihood concerns of the local population and ecological implications. But rather than the industry’s petulant lament that the mining ban has shaved off a percentage point or two from the GDP growth rate, it was local grievances that guided the court. Accepting the concerns of 33 panchayats which petitioned that 1.5 lakh persons were directly employed in mining, the court expressed its helplessness in imposing a complete ban on mining. Further, the SC has capped the annual output of iron ore at 20 million tonnes subject to an expert committee submitting its findings. While lifting the mining ban in Karnataka, it had placed a similar annual cap of 30 million tonnes.

However, the SC’s cap for Goa is higher than the annual cap of 12.5 million tonnes suggested by the Justice MB Shah Commission report, which triggered a slew of punitive measures from the Goa government, Union Ministry of Environment and Forests (MoEF) and the Supreme Court. The Shah Commission report also alleged a loss of Rs35,000 crore to the exchequer due to illegal and excessive mining. Justifying the cap on ore extraction, the SC articulated the twin-philosophies of inter-generational equity and sustainable development. The Supreme Court also directed the creation of a Goa Iron Ore Permanent Fund into which future mining leaseholders will have to remit 10 per cent of the proceeds of iron ore sales. The state government has been granted six months to frame a comprehensive scheme to utilise this fund for public good.

Unfortunately, the Shah Commission’s concerns regarding environmental clearances has been glossed over. The commission had recorded instances of diversion of forest land to mining lessees and encroachment outside the leased area despite the National Wildlife Board declaring areas within 10 kms of national parks and sanctuaries as eco-sensitive zones. However, the SC has now reiterated that mining activities are forbidden only in a one-km distance from park boundaries. This is a rather narrow buffer zone amenable to violations as the past experience in Goa shows us. Goa Foundation, the original petitioner in the case, had pointed out that 33 mining lessees operated within a 1.5 km distance of sanctuaries.

Any mitigative impact on iron-ore exports from this ruling will be minimal in the short run. The record high of 117 million tonnes India exported in 2009-10 and preceding years rode on China’s ravenous appetite for iron-ore in the run-up to the 2008 Olympics and the 2010 Asian Games. With tougher environmental restrictions and shutdown of polluting industries in China, the low-grade iron ore mined in Goa might find fewer takers there while domestic steel-makers do not have the furnaces to process it. But the economic implications cannot be glossed away; from a net exporter of iron ore until two years ago, India imported over 1.5 million tonnes in 2012-14. Over $17 billion in foreign exchange earnings was foregone. Despite the SC lifting its ban on 119 mines in Karnataka last year, only around 20 of these have reopened; the rest blaming the plethora of forest clearances to be secured. With GDP growth at a decadal low, India’s desire to ramp up iron-ore mining and exports is understandable. But investing in domestic manufacturing and utilising mineral wealth domestically has benefits and fewer trade-offs. This might just help preserve resources for future generations and end the costly import of capital goods.