The cancellation of 88 Goa mining leases by the Supreme Court on February 7 is the latest crisis to hit the iron ore export industry in the coastal state since the ban on mining between 2012 and 2014.

In its judgement, the Supreme Court criticised the Goa government for hastily renewing mining leases in late 2014 and early 2015, with retrospective effect from 2007, just before amendments to the Mines and Minerals (Development and Regulation) Act came into effect, making it mandatory for mining licences for notified minerals like iron ore to be auctioned.

The BJP-led government’s bid to escape the auction route has cost the industry heavily, with the state now looking for a way out of the impasse. Earlier this week, Chief Minister Manohar Parrikar held an all-party meeting with legislators to thrash out a solution, promising a road map for the mining industry by the end of the state’s budget session, which is due to commence shortly. In the meantime, Goa’s export merchant miners have eschewed comment on the Supreme Court order. Even the Goa Mineral Ore Exporter’s Association has made no official statement so far. According to the order, the leases cannot operate after March 15.

The order is the latest in a series of setbacks the mining industry in Goa has faced in the past few years. The boom years of 2005-’11, when iron ore exports from the state peaked at 54 million tonnes per annum amidst increased global demand and high prices, are a but a distant memory. In 2012, the Shah Commission reports, which alleged large-scale irregularities in the state’s mining sector, led the Supreme Court to ban mining in Goa. When it lifted the ban in 2014, it capped extraction to 20 million tonnes per annum. The cancellation of leases comes as the regional mining industry’s toughest challenge yet – some say since 1961. How did this come to pass?

A brief history

The liberation of Goa in 1961, from centuries of Portuguese colonial rule, put a question mark on 596 mining concessions granted to private parties by the erstwhile Portuguese government. Under colonial mining laws, titles of concessions were granted in perpetuity and were recognised as a patrimonial right. Concessionaires paid the government a fixed tax dependent on the area of the mine, and a proportionate tax dependent on gross amount of mineral extracted.

After liberation, the Union government made several unsuccessful attempts to cancel the concessions. The Mines and Minerals (Regulation and Development) Act, 1957, was made applicable to Goa Daman and Diu from October 1, 1963, except for Section 16 (Power to modify leases granted before October 25, 1949). In the interim, the government sought information on the titles of concessions, and by various decrees collected levies, taxes and supervised extractions.

Section 16 of the Mines and Minerals Act was enforced in Goa in January 1966, and the controller of mining leases, Government of India, thereafter modified the concessions into leases, overruling the miners’ objections. Miners filed revision applications with the Union government in 1969 and got a favourable decision in May 1975. That same month, however, the controller of mining leases initiated processes to collect dead rent (a fixed rent from mines without considering the fact whether the mine is profitable or not) and royalty, under Section 9-A of the Mines and Minerals Act, which had been added in 1972. The concessionaires approached the court, and in September 1983, a court order restrained the Union government from enforcing the notification and treating the concessions as leases.

When taxes were still sought to be collected, miners filed another petition in 1978, winning the case in November 1983, when the government was restrained from recovering royalty and was instead directed to refund what was termed “illegally” collected royalty. When the Union government did not issue the refunds, some concessionaires filed suits and obtained decrees against the Centre, but most did not press the matter. Finally, on April 30, 1987, the Centre tabled the Goa, Daman and Diu Mining Concessions (Abolition and Declaration) as Mining Leases Act. It was passed on May 11 that year and was notified just a few days before Goa was granted statehood on May 30, 1987. Over July and August 1988, notices were sent to all concessionaires to pay, with retrospective effect, royalty from December 20, 1961, to October 1, 1963, and dead rent from October 1, 1963.

The concessionaires went to court again. They challenged the powers of the Abolition Act before the Bombay High Court in several writ petitions in 1988. They obtained an interim stay, which allowed them to carry on operations but were directed to go through the process of the existing Mines and Minerals (Development and Regulation) Act for the renewal of leases. A final order in June 1997, however, upheld the Abolition Act.

Goa’s miners then moved a Special Leave Petition before the Supreme Court, where the case is tagged with other matters and has remained pending before a larger constitutional Bench.

Meanwhile, as per the High Court’s interim order, by November 1988, 379 leaseholders filed first renewal applications under the Mines and Minerals (Development and Regulation) Act. An equal number filed second renewal applications in 2006 for leases that were to expire in 2007.

The state government did not act on the second renewal applications. It was unable to fix an acceptable level of stamp duty, and the renewals remained pending. The mines functioned under a “deemed renewal” interim clause, until the Supreme Court in a 2014 judgement adjudged the operation of “deemed renewals” as illegal, and asked the state government to take a decision on fresh grant or renewal of leases.

The Parrikar government notified the Goa Mineral Policy in 2013 and the Goa Grant of Mining Leases Policy in 2014, but it tripped up in its hasty allotment of second renewals to 88 leases before January 12, 2015, to sidestep the auctioning process that would come into force under the amended Mines and Minerals (Development and Regulation) Ordinance of 2015. In one of his first reactions to the February 7 order, Parrikar blamed the decades-old pendency of the challenge to the Abolition Act before the Supreme Court as responsible for the chaos over the mining leases.

Activists flag concerns

The February 7 order came on a petition filed by the Goa Foundation, which initially red-flagged ecological damage in its petitions, but later also began questioning the economics of Goa’s current mining scenario and the state’s leasing policies.

Several public interest litigations by the Goa Foundation over the years have led to the steady reduction of mining lease areas in the Western Ghats. In 1999, during a brief period of President’s Rule in the state, non-governmental organisations, including the Goa Foundation, managed to get two additional wildlife sanctuaries in the Western Ghats – Mhadei and Netravali – notified, against the state government’s wishes. The Foundation got a series of apex court orders thereafter to implement mining bans within national parks and sanctuaries (in 2000); mining bans within a one-km buffer zone of these parks and sanctuaries (in 2006); and rules directing that operations within 10 km of sanctuaries would require mandatory permissions from the standing committee of National Board for Wildlife (in 2006). The one-km buffer zone mining ban affects 32 mines in the state.

With the state government now having to consider auctions to issue fresh leases, the Goa mining industry could now see the entry of bigger steel industry players into what was once protected turf. Coal for some Karnataka-based steel mills is already being imported and transported through Goa’s Mormugao Port.

The Opposition Congress and Goa Forward Party, part of the ruling coalition, are currently in favour of limiting mining operations to established regional players. The argument is that regional players have a greater corporate social responsibility and decades-old commitment to the state. For Goa’s mining sector, the issues over its leases seem to have come full circle.