India’s mining reforms ignore the livelihood and rehabilitation of those affected by the industry

As the debate around the new farm laws rages on, the Indian government has gone ahead and cleared changes in the country’s mining laws, to push mineral extraction and production. Like farming, mining is another sector where the mining reforms, meant to boost the economy, are going to have large-scale consequences.

The changes, according to the government, will have a positive impact on the sector and economy, but experts working with the mining-affected communities note that they could have a domino effect, with a negative impact on communities, human health, water bodies, environment or wildlife.

The experts point out that the government, in fact, needs to look at displacement and rehabilitation issues and give attention to the transition of communities and their livelihoods in areas where mines will exhaust in another two or three decades.

The mining reforms proposed in August 2020 aimed at increasing participation of the private sector in mineral exploration, clearly defining illegal mining, removing the distinction between captive and non-captive mines, resolving legal issues, moving towards an auction-only regime, developing a national mineral index and creating tangible assets using the district mineral fund.

In May 2020, while the central government was announcing a Rs 20-lakh crore package to kickstart the stalling economy, mining reforms was a big item on the agenda. It was also emphasised during the budget of 2020.

The move, however, was criticised by the mining-affected communities with experts stating that it comes in the middle of the Covid-19 pandemic while people are battling for survival. They had also noted that such far-reaching changes – propagated only in English language and only online – need to be widely accessed and debated instead of just giving a few weeks to people to send suggestions. The government had received a large number of comments and suggestions on the proposed reforms in response to the public consultation notice.

Earlier this month, sources confirmed that the Union Cabinet, chaired by Prime Minister Narendra Modi, cleared changes in the mining norms to give a push to the sluggish economy. The view that the uptick in mining activities and mining reforms will give a significant push to the slowing economy, including providing jobs, has been highlighted by many in the central government and industry, stating that it will help in taking the Indian economy to the “five trillion-dollar mark” within the next few years.

What changes will mining reforms bring?

According to sources, the changes made by the Union Cabinet will “resolve legacy issues through amending the Mines and Minerals (Development and Regulation) Act which will make a large number of mines available for auctions and strengthen the government’s idea of an auction only regime and boost transparency in the system”.

The mining reforms cleared by the cabinet, including amendments of certain acts, will now go to parliament for clearance during the budget session in February 2021.

The reforms will also have provisions for “compensating those whose mineral concessions would be cancelled under this amendment, through the National Mineral Exploration Trust funds”.

According to sources, the government believes that the move will “operationalise a large number of mines and will bring a large number of mines into production while making the public sector units efficient and competitive”.

In other words, this would mean a lot of new chances for the private sector into mining as well as taking big strides towards an auction-only regime for minerals – a move that is not entirely appreciated by some players in the mining sector.

This would mean that soon about 500 mineral blocks across the country would be up for auction even as the final decision of it will depend on the states where those mines are situated.

The reforms also talk about charges on the extension of mining leases for government companies to create a “level playing field” and bring uniformity in the sector. The changes further focus on the removal of the distinction between captive and merchant mines following which the captive mines will be allowed to sell up to 50% of the minerals excavated during the current year.

Kanchi Kohli, a senior researcher with Delhi-based Centre for Policy Research, emphasised that these reforms “present a myopic view of the mining sector.”

“The legacy issues do not identify the serious infirmities that have been identified by high-level committees, including that of the Supreme Court,” Kohli told Mongabay-India. “These include decades of illegal mining resulting in land grab, high levels of pollution, unemployment and loss of the biodiverse farm, forest or grasslands, over and above the huge loss of revenue for both central and state governments. All these continue to prevail and cannot be wished away simply by ownership and management to the private sector.”

District mineral fund to focus on visible outcomes

As part of the approved amendments, the cabinet has reportedly okayed amendments to the guidelines related to the district mineral fund which “intend to utilise these funds better with more visible outcomes” and make the local member of Parliament a member of the body governing those funds.

But this is one area of concern that mining-affected communities have repeatedly voiced. They often complain that there is no transparency on how this fund is used and that bodies tasked with use of district mineral fund do not properly involve the mining-affected communities resulting in funds being used for issues that don’t matter to them.

Rajesh Tripathi of Chhattisgarh-based Jan Chetna Manch, who works with mining-affected communities in Raigarh, states that even though their district has hundreds of millions under the district mineral fund mechanism the people are devoid of basic facilities which should have been provided for them anyways.

He also said the government failed in reaching out to the mining-affected communities – an important stakeholder – and consider their concerns while deciding about the mining reforms.

Kohli said that the “design and viability of the district mineral fund as a concept has faced serious criticisms from the time it was proposed and envisaged”.

“One of the fundamental criticisms was that the district mineral fund is a distraction and justifies mining at all cost,” Kohli said. “In fact, it is viable only if mining operations continue to grow. The experience with the district mineral fund has thrown open even more challenges where fund collections are increasingly being channelised away from the needs and welfare of people most affected by mining operations. In such a context, the intention to better utilise the district mineral funds appears to be mere lip service to address serious hardships being faced in most heavily mined areas.”

Reforms aim to simplify the mineral exploration

In order to give the impetus to the mining sector, the government also proposes to simplify the mineral exploration process.

According to the government, despite the huge mineral potential, the exploration activities are abysmally low in India and that of the total Obvious Geological Potential area of 0.571 million square kilometres only 10% of the area has been explored so far while mining is carried out in only 1.5% of the Obvious Geological Potential area.

The government sources point out that while countries like Canada and Australia spend almost 14% of global exploration expenditure, India’s exploration expenditure is approximately 0.2% and that too mainly on surficial deposits and not on minerals which we import.

Under the changes that were cleared by the cabinet, the focus is also on facilitating a seamless transition from exploration to production and rationalising stamp duty.

The government sources claim that the effective tax rate on mining in India is about 64% which is highest in the world wherein other countries it ranges between 34%-38%. They note that one such tax is stamp duty which is computed differently in different states. Thus the government proposes to amend the Indian Stamp Act, 1899 to bring uniformity across the states in the calculation of the stamp duty.

The reforms cleared by the cabinet also propose to introduce an index-based mechanism by developing a National Mineral Index for various statutory payments and others for future auctions.

They propose steps to review the functioning of National Mineral Exploration Trust, which was formed to promote exploration of minerals in the country, as the pace of exploration, the government often says is abysmally low and expenditure is negligible.

“Due to various reasons, expenditure under the National Mineral Exploration Trust is not satisfactory and thus exploration,” said government sources. “Therefore in order to boost exploration, it is proposed to make the National Mineral Exploration Trust an autonomous body.”

Sreedhar Ramamurthi, an earth scientist of the Environics Trust, which is involved in research and development on environmental issues, called for rationalising of mining activities.

“Whether it is the cement industry, iron ore or many other minerals, there is this problem of excess capacity and ultimately this ends up cartels where prices of the commodities such as cement and steel are not coming down,” Ramamurthi told Mongabay-India. “There is very poor demand in the market. But still, there is this rush for increasing the mining activities. This is going to end up digging more of our land across the country – in destroying the forests, water bodies and lives of communities who, as per the experience so far, are rarely rehabilitated properly.”

“If we continue with this rush, it is only going to add to the woes of the communities and the environment,” he added. “Instead, the idea should be to look at rationalising mining activities and utilising already opened areas rather than opening new ones.”

Kohli stressed that the “government is increasingly missing the opportunity to bring in reforms which look at the rehabilitation of areas where mines capacity will be exhausted in the next two-three decades”.

“This can lead to a serious crisis for local contractors and ancillary operations which will have no relevance,” said Kohli. “Most people have already lost their farms and access to forests for livelihoods, and few daily wage or petty jobs available will be lost too. Single-minded reforms focusing only on mineral extraction and production are blind to all the other lived realities of mining geography, be it wildlife, forests, food, water or human cultures.”

She emphasised that India needs a “reform in the way mineral policy is designed”.

“Legacy issues include displacement, contamination and human health or ecological fragmentation,” she added. “It also needs an upfront evaluation not only on fiscal parameters but also on grounds of human rights and environmental justice.”

This article first appeared on Mongabay.