Sunita Narain: Towards beneficial mining

Sustainable mining is an oxymoron. Environmentalists will tell you this. Mining – from coal to limestone – destroys forests, devastates mountains and leaves the land pock-marked. It also destroys people’s livelihoods and displaces them. Worse, modern, mechanised mining hurts livelihoods based on land but does not replace them with local employment – estimates show that direct employment in the mining sector has fallen sharply. It provides wealth, but not for local development.

This is where the dilemma kicks in. Also, there is no doubt that the nation will need to mine its natural resources for industrial development; saying no to all mining will not work. Therefore, the solution to mining is to find ways in which devastation to the environment is minimised. Also, there is a need to create a framework that will share the benefits of the resource with poor communities living in such rich lands. It is a challenge.

The answers are difficult and diverse. But one part (small, but not insignificant) is to establish the principle that people will be made stakeholders in the development of the natural mineral resource. This is not a new idea, but it is certainly neglected and discredited. In 1997, the Supreme Court ruled that private leases over mines would not be allowed in Schedule V areas, which are predominantly tribal. The Samatha judgment was named after the tribal activist group that had taken the matter to the court on behalf of the Nimalapedu village, where the Birlas needed land to mine calcite. The court ruled that “at least 20 per cent of the net profits should be set apart as a permanent fund for community use”. But this judgment was an unacceptable game-changer for the fast-growing and powerful mining sector. It was overturned or simply sidestepped.

In 2008, the Centre for Science and Environment’s report titled “Rich Lands, Poor People: is ‘sustainable’ mining possible?” discussed the global practice and imperative of sharing benefits with people. This was also the time when the country was beginning to revisit the provisions of the outdated Mines and Minerals (Development and Regulation) Act, 1957. In 2006, the Hoda Committee (named after its chairperson Anwarul Hoda, the then member of the Planning Commission) was formed to recommend changes in the mining policy. Unfortunately, the committee’s report was steeped in the interests of the mining industry since it saw no need for sustainability – except for some weak and inconsequential words – and certainly had no time to waste on people’s interests.

But for once better sense prevailed. The Hoda report was junked as the Union ministry for mines began work on a new draft Bill, amending the 1957 Act. This draft amendment included, for the first time, a provision for sharing benefits with the people. The first, and the most logical, idea was to create a system for granting equity (26 per cent) in companies. This would, as suggested by the Supreme Court, work towards building local control over mining companies and shareholders with interests in sustainability. But this idea, too, was killed. Mining companies led by their powerful lobbies, like the Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Federation of Indian Mineral Industries, launched a virulent attack on the very principle of “benefit sharing”. Their argument was that if this Bill was passed then tribals, flush with money, would take to drinking and “beat up their wives”. The contempt for people was open and deplorable.

Finally, after much pushing and shoving, the draft Bill went to a Group of Ministers (GoM) in June 2011. The draft included the provision for profit sharing. But even at the last minute, there was pressure to dilute the provision. The confidential note for the GoM ingeniously suggested that the current provision of royalty was sufficient. There was no need to introduce any direct payment to communities.

Once again, better sense prevailed. The GoM has reportedly insisted that the principle of benefit sharing must not be diluted. But to make it easier to compute benefits, it decided to ask for 100 per cent of the royalty paid on minerals (doubling current royalty) to be given to local communities through the district-level fund — roughly Rs 4,500 crore annually, higher than what would have been given through the profit-sharing mechanism. This would not apply to the nationalised coal sector, which would pay 26 per cent of the profits. Now the details of the fund need to be worked out.

This is the first time the concept of natural resource rent is being established in the country. In this age of green accounting, a nation’s wealth should be re-measured in terms of its value for equity and sustainability. Green growth is fundamentally about inclusive growth. So this baby step towards benefit sharing needs to be watched and supported.

sunita@cseindia.org