Goas Inglorious Past: The Great Mining Swindle

Zero loss mining and intergenerational equity

By Sarah Dynah McGinnis
A loss amounting to twice the cumulative state revenues was
uncovered following an investigation into mining activities by Goa
Foundation. This money represents the value of minerals mined and
exported during the period 2004 to 2012 from Goa. The amount
represents a Rs. 3.7 Lakhs loss of mineral assets for each and every
Goan; minerals that we inherited and to be passed on to our
children.
How is it possible that the state could have lost this massive sum of
money and for this to go unreported? In addition, how can those in
power have handed over our inheritance to the mining company
which amounted to more than the cumulative state revenues?
Who is the architect of this great mining swindle? How can we
resolve to recover this money? What is zero loss mining and how
can we implement this to protect us from this type of criminal theft
in the future?
The last ten years have witnessed radical changes to mining
practices in Goa. These changes contrast with the methods
historically used to extract our rich Goan mineral resources. The
latter half of last century saw the emergence of steady, long-term
relationships with Japan and other nations that benefitted
employment while at the same time creating welcome foreign
exchange. This consistent and balanced approach to mineral
extraction helped insulate Goa against technological advances,
mechanisation and the inevitable cycles of boom and bust, that
were features of the late1970s and early 1990s economic climate.
In stark contrast to the historic approach, the last ten years have
seen a major shift from the established pattern of long-term
contractual supply, to spot pricing, in particular of iron ore. This
change to the method of pricing developed mainly as a response to
demand from China. As a consequence of this shift a mining frenzy
ensued, resulting in what can best be described as a free-for-all.
Fuelled by increased iron ore values, profiteering soared and greedy
mining company bosses ensured that prices were matched on the
ground by accelerated of levels of extraction and unlicensed activity.
Criminal levels of profiteering by out-of-control mining companies
was not exclusively a Goan phenomenon. In 2010 an urgent inquiry
was launched under Justice M.B. Shah, to investigate mining
malpractices across three states. In 2011 the Public Accounts
Committee (PAC) of the Goa Legislative Assembly, under the

chairmanship of the then leader of the opposition, Manohar Parrikar

of the BJP, likewise submitted a report into mining activity.
A shocking catalogue of offences concerning the illegal siphoning of
Goas natural resources was uncovered. Crony capitalism and
systemic corruption abounded. A complex and sickening catalogue
of theft against the community-owned land assets and the people of
Goa was exposed.
in 2012 the Shah Commission stated .... illegal acts cant happen
without connivance of the politicians, bureaucrats and lessees.
There is a complete collapse of the system.
Not only did this scandal involve India's richest, most powerful,
feudal and dynastic mining bosses, but the PAC Report charged the
department of mines, the pollution control board, the forest
department, the police, the ministry of environment and forests, the
Indian Bureau of Mines and the Director General of Mines Safety
with systemic corruption and collusion in illegal mining.
Rs 3,500 crores lost by the State of Goa!
Hugely significant among the many improprieties relating to illegal
and excess extraction, was the scandalous finding that the state had
somehow lost Rs. 3,500 crores due to iron ore being exported
without any form of royalty being paid. In truth this money was due
not to the state, but to the true custodial and constitutionally legal
owners of the Goan minerals; the people of Goa.
To what extent do these enormous figures ultimately translate into
dilution of our community-owned assets? Our jointly and severally
owned minerals and our intergenerational equity?
Goa Foundation conducted an analysis of the audited financial
statements of Sesa Goa along with volumetric data from the
industry body, GMOEA, for an eight-year period (2004-2012). They
discovered that during this period, the state of Goa exported Rs.
87,748 crores of iron ore.
They then calculated what would be a generous and realistic
estimate of average extraction costs. This figure amounted to Rs.
33,914 crores, inclusive of a generous allowance of 20% post-tax
return on the capital employed for the miners.
As a result, Rs. 53,833 crores is a conservative estimate of the value
of the community-owned mineral assets prior to extraction. This
amount is the estimated value of the jointly owned mineral assets
that had been extracted, and which ultimately belongs to the future
generations of Goa.

Over this same period the state of Goa received a paltry Rs. 2,387
crores from the total amount. Even this token amount was treated
by the state as revenue and frittered away, not saved.
Over an 8 year period, we lost Rs. 3.7 lakhs per capita
from the mineral commons, effectively a per head tax,
The Goenchi Mati Movement

In simple terms:
The state lost over 95% of the value of the mineral
The loss was twice the total state revenues for that same
period
The extra after tax profit of the miners amounted to more than
the state revenues!
The loss to our future generations is absolute. How will we explain it
to them? In effect it is a per-head tax of Rs. 3.7 lakhs (28% of GSDP
for 8 years). Every man, woman and child in Goa lost Rs. 3.7 lakhs,
and a few became rich. This is not trickle down economics, it is
looting economics. Quite simply, its a graphic and despicable case
of theft and one that violates the rule of law, socialism, equality,
the right to life and the common good aspects of the Constitution. Is
this ethical? Is this just? Is this right? Is this moral? Is this fair?

Essentially, mining involves the sale of our shared inherited

minerals. We have a responsibility to ensure that the full value of all
mineral receipts are treated as capital receipts and invested in new,
equal and permanent assets. This is on account of the capital being
generated and due from the sale of our inherited assets.
The Goenchi Mati Movement is advocating a system that would
ensure that the entire value of our minerals be captured and
transformed into common inherited asset (a permanent endowment
fund), with any income distributed to all as a Citizens Dividend,
thus preserving the original, inflation-adjusted value of the asset.
Had Goa followed these principles, each man woman and child could
have received Rs. 1,000 per month, inflation-adjusted and in
perpetuity.
The Movement states that it is trying to save our childrens future. It
advocates targeting Zero-Loss mining, the saving of all mineral
receipts for our future generations in a Permanent Fund, and the
distribution of the resultant income as a Citizens Dividend due to all
Goans reflecting their right of ownership.
Zero-loss mining and intergenerational equity must be the objective
of our community and our mining laws. We must start saving
minerals or their value for our future generations, instead of burning
them recklessly. We can have fair mining. We must have fair mining.
Goenchi Mati Movement
Find out more: www.goenchimati.org
www.facebook.com/goenchimati
www.twitter.com/goenchimati.

email: [email protected]