Thanks to Economic Times.
India’s mining industry should be encouraged, not damaged
March 16 was an unfortunate day for India’s mining sector in particular and economy in general: according to a March 4 Supreme Court order, mines in Goa were forced to shut down operations from March 16. The backbone of Goa’s economy, the mines have been in operation for the last 75 years and have maintained higher environmental standards than Australia and Brazil, both of which produce the largest quantity of iron ore in the world.
Goa’s mining industry supports the livelihood of 300,000 people. The state’s reserves do not possess high-quality iron ore, but it is still used as a resource backup by China, South Korea and India. In the past, the mineral has earned foreign exchange up to $8 billion a year. It has also paid almost Rs 6,000 crore every year to the exchequer.
There probably isn’t any other example in the world where an operative mine has been shut down without any environmental law being flouted, when it’s not run illegally, or it hasn’t defaulted on payments. The mining sector in Goa has suffered over the last three years due to mines being shut down, which has led to loss of exports and job opportunities going down.
Any issue related to safeguarding the environment must be looked into. But, at the same time, those who demand a blanket shutdown of mining are being against this natural resources-rich nation’s interest. As a result, India will remain dependent on imports of natural resources and jobs will continue to be created outside.
While GoI came up with the Mines and Minerals (Development and Regulation) (MMDR) Act to boost production of natural resources like iron ore and facilitate ease of doing business, production has considerably slowed down. There are also a number of ancillary industries that are bearing the brunt of this slowdown. Owners of trucks that transport iron ore, for instance, have taken loans from banks to buy commercial vehicles. But the imposition of ban means that there will be no work for them.
If an early solution is not found, these loans may need to be waived. GoI should also pay a fixed amount every month to miners during
the closure of these mines. These employees and their families also have a right to survive.
In today’s world, it is impractical to take away a mine from existing operators, as most of the infrastructure is owned by them. So, it may
not be possible to auction mines. If the plan to auction Goa mines is to increase revenues, GoI can increase royalties and taxes at any
If the auction of fully operational mines in Goa takes place, we may end up sending the wrong signal to the world that will deter foreign
investments in India. The end objective is to increase production of natural resources in a sustainable manner, so that more jobs can be
Large companies like Sesa, Dempo, Salgaocar, Timblo and Chowgule, which have been operating in Goa for decades, have always adhered to the law of the land. These companies have spent millions to rehabilitate those mines, which were mined to their full capacity. They have, thus, set an example for other mining companies in the world in following environmental norms.
These companies have also created world-class physical infrastructure and key social assets like hospitals, colleges, mining universities and stadiums in Goa. Today, the state boasts of one of the best football academies in the country. Sesa Goa also runs India’s largest merchant pig iron plant with captive coke and power generation in Goa for producing value-added products. But these units, too, will
suffer now as they will not get iron ore supply.
Every year, India spends approximately $200 billion on the import of natural resources. Besides a drain on precious foreign exchange, these imports create jobs in other countries. With our favourable geology and sizeable reserves of different minerals, the time has come to look below the earth, nurture and develop a thriving natural resources sector that creates jobs, eradicates poverty and stems the flow of dollars to other nations.
It is satisfying to note that GoI is becoming increasingly aware about the enormous potential of the mining sector as manifested by its decision last month when the coal sector was opened up for commercial mining. Like the goods and services tax (GST), which was initially complicated but is now beginning to work smoothly, the mining sector will also bounce back strongly with government support.
We can then aim to raise the contribution of the natural resources sector to India’s GDP from the current 2% to 10%.