There appears to be no headway made towards resumption of iron ore mining operations, which have been at a halt for the past 32 months. Despite the Supreme Court lifting its suspension on April 21, 2014, and the State Government on January 25, 2015, followed by revocation of abeyance on Environment Clearances (EC) on March 20, 2015 by the Ministry of Environment and Forests (MoEF), the iron ore industry, the largest contributor to the State’s economy, is set to miss a fourth consecutive mining season, commencing October this year.
Chief Minister Laxmikant Parsekar appears confident of re-starting mining activities post the monsoon, but there are several hurdles on the way – be it clearance from the Indian Bureau of Mines (IBM), forests department, pollution control board or auction of piled up extracted ore or clearances under section 37 and 38 of the Mineral Concession Rules or stabilization of market prices. All these need to be cleared in the next four months, for the mining industry to recommence operations in October 2015. Clearances from the pollution board and IBM itself will take two to three months, while the forest department is clear that it won’t allow mining on forest land and also grant no wildlife clearances to leases located within one kilometer of wildlife sanctuaries and national parks.
Industry players themselves are pessimistic about the forthcoming mining season – their biggest worry lies in the fact that international market prices are at the lowest, coupled with taxation, bringing in a negligible profit to the industry, which is already reeling under losses. To top this, there lies the biggest worry that the petitioner before the Supreme Court – Goa Foundation – might challenge the renewal process of leases by the government before the Apex Court.
Directorate of Mines and Geology has renewed 89 mining leases under section 8(3) of the Mines and Minerals Development Regulation Act 1957. Of these, ECs have been granted to 72 leases, of which 61 have been allowed fresh extraction on pro-rata basis to fit into 20 million tons capping.
Here are some of the major challenges to be surmounted before mining activities can resume.
Clearance from IBM
IBM has begun inspection of mining leases. 11 mines that have submitted their mining plans for approval have been inspected. On an average, IBM takes 2 to 3 months to submit its report.
Challenge: Of the 61 renewed mining leases allowed fresh extraction, only 15 have submitted their mining plan.
Status: Only 11 leases have been inspected.
Completion time expected: If all 61 are taken into consideration it will take more than 6 months.
Consent to Operate under Air and Water Act from Pollution Control Board
Of the 72 mines, the Board has inspected 44 leases as the legality of 17 leases is being questioned by Goa Foundation. The Board has kept these renewals on hold. The inspection report will be submitted to the technical committee of the Board by the end of June and the same will be placed before the Board for approval.
Challenge: The 17 leases on hold might find it difficult to get the Board’s clearance. Also there are 16 others, of which 12 are within one kilometer of protected areas and four in the forest land. The Board is unlikely to give its clearance to these, for want of clearance from the chief wildlife warden.
Status: 44 mines inspected for Air and Water pollution clearance.
Completion time expected: August (only those which are legal and clear in terms of all clearances).
Forest Clearance and Wildlife Clearance
There are 10 renewed mining leases allowed extraction up to 4 million tonnes awaiting the forest nod. There are six which are within one kilometer of the wildlife sanctuary, which is a prohibited area for mining activity, and four are operational on forest land. Unfortunately, these leases have also not been granted ECs by MoEF.
Challenge: To get the clearance from the forest department. The six which are in the protected area, will have to wait for the Supreme Court to modify its interim order dated August 4, 2006 with regards to mining in protected areas. While in the case of four, the forests department is clear there will be no more diversion of forest land for mining
Status: No WLC to six leases and FC to four leases
Completion time expected: Unknown
Violation of Rule 37 and 38 of MCR
A crucial issue, highlighted in the Goa Grant of Mining Lease Policy, has been kept secretive, such that even the officers of the Mines department and the lease owners are unaware of the current status. The then Chief Minister had said that the leases, found to have violated the provisions mentioned in the Public Accounts Committee Report (PAC), Justice Shah Commission Report and CEC, will be dealt on a case-to-case basis for renewal by imposing appropriate fines. 53 leases were issued show cause notices for violation; hearings were undertaken by the Mines Secretary (the findings kept under wrap) and these leases now stand renewed.
As per Rule 37 of the MCR, the lessee shall not, without the previous consent in writing of the State government assign, sublet, mortgage, or in any other manner, transfer the mining lease, or any right, title or interest therein. Similar, Rule 38 states that the government, may in the interest of mineral development, in writing, permit amalgamation of two or more adjoining leases held by a lessee provided that the period of amalgamated leases shall be co-terminus with the lease whose period will expire first.
Challenge: Goa Foundation can take up the matter before the Apex Court, as the violation was considered as a major illegality by the Shah Commission. The ground on which the leases were renewed can be questioned.
Status: All leases renewed.
Auction of 15 million tonnes extracted ore
As per the Supreme Court order the government has to e-auction all 15 million tonnes of ore, lying at jetties, lease sites, port, beneficiary plants, etc before allowing fresh extraction of ore. The falling international prices forced government to delay the auction process.
Challenge: DMG will have to e-auction the balance 9.40 million tonnes in the next four months and will also have to ensure that the entire 15 million tonnes are transported out before fresh extraction commences. With the monsoon set to start this seems impossible
Status: 5.60 million tonnes ore e-auctioned, while 8 lakh tonnes of ore have been exported to china.
Completion time expected: At least two years, provided the market conditions of iron ore stabilize
Falling international prices of iron ore and regaining international market
Goa has been the biggest exporter of low grade iron ore from India to China. The ferrous content of the ore being as low as 58 Fe, the entire ore is exported, with local steel companies not interested in buying such low grade ore. The iron ore market has been very volatile and the prices are expected to fall further. Also, with the mining industry at a standstill it has lost its China market, which has been captured by other mining countries like Brazil and Australia.
Challenge: Iron ore prices in the global market are likely to fall further, on the back of peaking consumption of steel in China, which will reduce the long-run price forecast for the raw material. From 2016 to 2018, prices might average $40 a tonne. Also Goa will have to look for new markets with China taken over by Brazil and Australia.
Status: Mining industry yet to resume, iron ore prices are at their lowest, no international market left for Goa’s low grade ore
Change in situation is expected: Unknown
