Goa’s CM vs. the mining lobby

It’s natural to believe that the head of a state that’s known across the world for its sea, sun, and sand, will be content—what the Goans call susegad. But Manohar Parrikar, chief minister of Goa, is far from happy. In the last few years, the idyllic coastal state has become the battleground for environmentalists fighting illegal mining, and mining companies bent on extracting a profit, with each accusing the other of ruining the state. So far, the government has played mute spectator, but Parrikar is having none of that.

Since 2007, he has brought up the issue of the deleterious effects of illegal mining numerous times. “I told the mining companies seven years ago ‘you are supporting mafia gangs. You are letting loose monsters. Nobody can benefit from this’, but they refused to listen,” he says.

Fighting words from a man who may have to go to the very people he’s railing against if he needs votes or funds to fight the next election, but Parrikar is unfazed. The ill effects of illegal mining was one of the key planks of his election strategy, and it evidently worked; in March 2012, his Bharatiya Janata Party won a larger number of seats than it had in the previous election (21 of 40 seats now compared with 16 in 2006) and he’s back as chief minister of one of India’s smallest states.

Mining is a powerful lobby; some of Goa’s oldest families are involved in it, and revenue from mining contributes to 20.7% of the state’s GDP. And then there are allied industries—logistics and transportation (trucks and barges, mainly)—that came up because of the mining boom. It’s a constituency no politician can afford to ignore.

But Parrikar is determined to clean up the system. He’s serious enough about it to say he won’t contest the next elections, so he has no reason to speak softly and keep the mining lobby happy. In Indian politics, where power and dynasty mean everything, such a stance is almost unheard of, and demonstrates Parrikar’s vision of a well-run, clean administration. (He’s popularly touted as the CEO of Goa, a nod to the businesslike way he runs the state.)

With little to lose, Parrikar can focus on finding a way out of the mess that Goa is in today. On one side is the future of one of the world’s great green tourism destinations ensconced between the Arabian Sea and the sylvan hills of the Western Ghats, one of the biggest natural ecosystems in the world, part of the hippie trail for decades, and a happy hunting ground for the Beat generation. Nearly 40% of its land is under forests, wildlife sanctuaries and parks, and the state gets some 2 million tourists every year. On the other side is an industry that contributes 21% to India’s iron ore output, feeding a near-insatiable Chinese market, bringing in Rs 16,000 crore in foreign exchange last year.

With revenues of $7.9 billion and a per capita GDP that is 2.5 times higher than the national average, Goa is India’s richest state, growing at more than 11.8% last year. But that’s tiny when compared with just one mining behemoth—Anil Agarwal’s Vedanta, which owns mining company Sesa Goa. The Vedanta Group earned $11.4 billion (Rs 61,617 crore) last year (not all of it from Goa).

According to its own reports, Vedanta paid around $5.7 million to political parties in India in the last three years. It is the target of a public interest litigation by the Association for Democratic Reforms and the former chief secretary of India, E.A.S. Sarma, which says the Congress and the BJP violated the Representation of People’s Act (1951) and the Foreign Contribution Regulation Act, which prohibits donations from foreign sources.

Understanding the mining issue in Goa is to understand the history of the tiny state, one of the last to join the Indian union. From the early 1500s, Goa, then called Estado de India (or the ‘state of India’) was under Portuguese rule. The Portuguese government, under the Portuguese Colonial Mining Laws, issued mining concessions to powerful families such as the Dempos, Salgaonkars, and Timblos. Between 1929 and 1961, the Portuguese had issued 784 mining concessions, all for an unlimited period. In December 1961, Goa became part of the Indian union, and mining was regulated by the Ministry of Mining, and the Mine and Mineral (Development and Regulation) Act, 1957 (MMDRA).

The Controller of Mining had begun to take steps to modify the Portuguese-granted concessions to bring them in line with the MMDRA, but the existing concession holders fought this. The mining companies (families) held that the concessions were not mining leases as defined in the MMDRA, and so they could not be modified. The various cases filed by the concession holders dragged on till 1983, when the Bombay High Court ruled in their favour, and added that since the concessions were not leases as defined in the Act, the government could not charge any royalty on the minerals extracted. (There’s really little difference between a lease and a concession; the terms of the concessions granted by the Portuguese were somewhat different from the MMDRA’s definition of a mining lease, and so could not be considered leases under the Act.)

Effectively then, mining in Goa was totally unregulated from 1961, when the Portuguese Mining Laws were repealed. The Goa government made several unsuccessful attempts to cancel the pre-1961 concessions, but had little success till the Union government passed the Goa, Daman and Diu Mining Concessions (Abolition and Declaration as Mining Leases) Act, 1987. Under this, all the Portuguese concessions were abolished, and were to be treated as leases under the MMDRA. Unlike the “in perpetuity” concessions, these have to be renewed regularly; the leaseholders have to pay a royalty to the government on minerals extracted; and all mining has to be done within the stipulated lease area.

Till 2006-07, mining in Goa was a relatively laid-back business. Yes, some miners did not renew their leases, others mined more than what they were allowed to, and some didn’t pay royalty. But this was on a somewhat small scale. And then came Vedanta. In 2007, it bought Sesa Goa, a mining company started in north Goa in 1954, from its then owners, Japan’s Mitsui Corporation. In 2009, Sesa Goa, now under Agarwal, went on to buy out another Portuguese-era mining company, Dempo. When Vedanta acquired Sesa Goa, it was producing a little over 6 million tonnes of iron a year. Today, it excavates 40 tonnes a minute, and produces close to 20 million tonnes of iron.

In early 2012, Fortune India was in Goa researching a story on Agarwal’s mining empire (See ‘All Is Mine’, Fortune India, March 2012). At the time, Arun Madgaonkar, former president of the Mineral Foundation of Goa, a body created by the mining companies to improve transparency and corporate social responsibility, had said the demand from China was so great that some companies (he did not name Sesa Goa, although the conversation was in the context of that company) were selling the low-grade ore usually used to refill mines. Other representatives of government and non-government organisations had spoken about Sesa Goa’s aggression. The most telling comment came from Claude Alvares of the Goa Foundation, an environment action group that has been fighting illegal mining for more than a decade: “Agarwal is a ruthless operator who will take out whatever is possible in five years and retire to England.”

It is one of the few obvious references to the fact that Agarwal is the outsider; he’s not from an old Goan family and has no vested interest in Goa. Parrikar himself is part of the charmed inner circle—he traces his roots to Parra, a village in north Goa. The Goans—whether miners or activists—have almost imperceptibly come together to face Agarwal’s onslaught.

Environmentalists say Sesa Goa, specifically, had been digging beyond its permissible quota and was opening up low-grade mines of little economic value. “For every one tonne ore extracted, two, sometimes three times is waste [earth without minerals]. Where does this go? It [gets washed away and] silts up the rivers in the Goa monsoons,” says schoolteacher Ramesh Gauns, who has been researching the environmental violations of mining companies for 10 years or so. “We have rains for four to five months in a year, how can such large-scale mining happen in a place like this? It is impossible to take care of the mud.” Gauns is referring to the fact that rains wash away dumps on the side of open-cast mines, resulting in silted farmland.

Illegal mining (without a valid licence, or mining more than the lease permits, or mining in areas outside the permitted limits) has been going on for decades in Goa, but on the whole, the authorities preferred to turn a blind eye to this issue, since the loss to the state was not substantial. People like Alvares had begun fighting, but it is only when Vedanta took over Sesa Goa and began mining more—and faster—than any other mine that Goa began to take notice.

Official data show that some 95 lakh tonnes of iron ore was illegally mined and around 50 lakh exported from Goa during the last four years. Activists say 48 of Goa’s 90 operational mines were extracting minerals above the environment ministry’s limits. Alvares accuses the nodal industry body, the Goa Mineral Ore Exporters Association (GMOEA), which registers exports, of turning a blind eye to illegalities. The secretary of the GMOEA, Glenn Kalavampara, denies this vehemently. “That mining is dirty business is a sentimental approach. The point is, it is a critical and legitimate business, which has been going on on a big scale for six decades,” he says.

Miners are not the only lobby working in Goa. There is the deeply political lobby of transporters. In 2010, based on reports and petitions (including from the Goa Foundation) that “mining, raising, transportation, and exporting of iron ore and manganese ore” were being done “illegally or without lawful authority in the various states”, the central government set up the Justice M.B. Shah Commission to probe illegal mining in the country. Goa was one of the primary states being investigated, since it produces a large portion of the country’s iron ore. The commission’s report stated that “the commission has received large number of complaints in writing as well as oral regarding massive encroachment by the lessees in the adjoining areas and all along the main rivers/nalas which are used for transportation of iron ore through barges”.

The report says under the MMDRA, if any person “raises, transports, or causes to be raised or transport, without any lawful authority, any mineral from any land”, then the minerals so raised, as well as the tools and equipment used to raise them, as well as vehicles transporting them, are liable to be seized.

Of the thousands of trucks (16,000 to 20,000) that were working in the mining industry in 2010-12, only 8,000 were registered. There are also between 400 and 700 barges moving ore on the rivers Zuari and Mandovi. Given the sheer scale of operations, it’s impossible to find out how many operators have unregistered trucks. Parrikar claims that if illegal mining is stopped, illegal transportation will automatically stop. It seems like a specious argument, but given that there are a number of BJP party members deeply entrenched in the business, there’s little else he can say or indeed do.

In his interim report filed in July 2011, Shah came down heavily on the state governments as well as the Indian Bureau of Mines: “It was apparent that departments of the State and the Indian Bureau of Mines have failed to control illegal mining for the reasons best known to them.”

The Shah report adds that “unrestricted, unchecked and unregulated” export of iron ore to China only served to make the mining companies richer at great cost to the state; Shah calculated the loss at Rs 34,935 crore during the period 2006-11. Later, a report by the Central Empowered Committee (CEC) found many irregularities in the mining industry in Goa and suggested that mining be banned until an environmental impact assessment is done. The CEC report found 19 mines illegally operating within wildlife sanctuaries and 23 within 1 km of restricted forest areas.

Based on the Shah report, the Goa Foundation withdrew all its other petitions, and filed a single case demanding action from the Goa government and the central government and asking for all mining to be stopped until the illegalities were resolved. P.K. Mukherjee, managing director, Sesa Goa, refuses to talk about the case. However, a statement from the company mentions that the numbers are based on wrong interpretation, which in turn are based on Google Maps and faulty survey done by analogue global positioning systems.

Last March, Agarwal compared the current Indian mentality regarding mining to that prevailing in the U.S. during the 1960s and 1970s. At that time, the mining industry there had to face criticism from social groups for polluting the environment, depleting the country’s natural resources and destroying the forest cover. “India too is going through a similar transition and I am very confident that here, too, we will realise the importance of using natural resources for our own development,” he said.

Meanwhile, in the run-up to the Goa State Assembly elections in March last year, Parrikar was making illegal mining an election issue. The BJP won by a considerable majority (21 of the 40 seats; the Congress, which was in power, trailed with 9 seats), and Parrikar became chief minister for the second time. (His earlier tenure was from 2000 to 2005.) Almost as soon as he took over, he began cleaning up the system; he sacked Arvind Lolienkar, the director of mines and geology, who had been implicated in the issue of illegal mining. But before he could do much else, the Supreme Court ruled on the Goa Foundation’s petition. On Oct. 5, 2012, based on the findings of the Shah Commission and other reports, the court banned all mining in Goa. The ruling is being appealed against by the state government as well as the mining companies. Since the matter is still in court, Vedanta refused to comment.

Parrikar is not happy with the order. “I had stopped illegal mining. I had stopped illegal transport too. The court should [have kept] the situation on the ground in mind,” he says. But his options seem limited; with the ban in force, there’s nothing he can do till the case is settled.

One of the reasons that Shah gives for rampant illegal mining is corruption in high places. That’s something Parrikar is unlikely to be implicated in; even his sternest detractors agree that the chief minister is entirely honest. In fact, Parrikar even refused to stay in the chief minister’s official residence in Altinho, preferring to commute from his two-bedroom apartment (on which he is still repaying the home loan). He also slashed his 128-member staff to 17, and often drives himself to work.

Like any politician, Parrikar is quick to blame previous governments (the Congress party’s Pratapsingh Rane, followed by Digambar Kamat) for the present problem. “What happened during the earlier tenure was illegal. Punishment and recovery has to be initiated,” he says. “If you ask me personally if my predecessor is responsible for illegal mining? My answer is ‘Yes’.”

Parrikar’s government is now trying to build bridges with the mining companies. His insistence on reducing the buffer zone is seen as one of the key steps in this process. In 2002, the National Wildlife Board of India, which governs and regulates the country’s wildlife sanctuaries, passed an order that there should be no industrial activity in a 10 km area around any wildlife sanctuary. This order was reviewed in 2005, and states were given the freedom to set up the size of the buffer zones on a case-to-case basis.

However, the Supreme Court ruled in 2006 that mining companies needed to get permission from the National Wildlife Board if mines were set up within the 10 km buffer zone. There’s an appeal against this order. Parrikar says under the 2005 order, Goa could set its own buffer zone, which, given the size of the state and other parameters, should not be more than 1 km. “If we have a 10 km buffer for every ecological area, we cannot do anything in the state. It will stop 90% of all economic activities. I cannot let that happen,” says Parrikar. “I am clear that a 1 km buffer is enough.” Environmental activists, including Gauns, are strongly in favour of a buffer of between 2 km and 5 km.

When we spoke to him last March, Vedanta’s Agarwal said: “You should be perceived to be a good businessman and support what leaders want to do.” With the buffer zones issue, Parrikar seems to be doing what the mining companies want him to do. Opposition parties have gone on record calling Parrikar an employee of the mining companies, claiming that the chief minister is changing his tune now that he’s in power.

Parrikar is not bothered by such accusations. He’s taking his role as a new broom seriously. “What we need is clear laws and strict implementation, instead of a debate on the moral issues of mining. It exists. Let’s tackle it.”