The iron ore mining ban hurt Goa’s economy and livelihoods. Hold-ups in mining iron ore and bauxite have cost our economy dear India has the potential to produce $400-500 billion worth of oil and gas, gold, silver, iron ore, copper, coal, calcium, rock phosphate and others. It is bound to generate substantial revenues for the government, which will be helpful in developing infrastructure for the country. This will also create employment for 10-15 crore people, by setting up over thousands of new large, medium and small scale industries for processing natural resources. The GDP will improve and the current account deficit will come down, making it a win-win situation for all. Investment in exploration is a must for our future generations. The model could be based on revenue sharing or royalty, the latter being determined on the basis of quantity of minerals extracted. Missing the bus
The natural resource sector has been passing through a challenging phase in India. Blanket bans and delays in clearances have brought this sector to a non-viable position today. Even with an abundance of rich mineral reserves and resources, we are not able to leverage it for our economic strength. Not every country has rich mineral resources, and those so blessed have utilised them for overall growth, securing employment and livelihood, eradicating poverty and stabilising their economies. At one point, countries such as Brazil, Canada, Australia and those in Latin America were on a par with India when it came to utilisation of natural resources. Today, these countries have surged ahead, while we have remained stagnant. In India, the fall in GDP growth can be attributed largely to the sluggish growth of the natural resource sector. Even as the available resources are not being utilised, the tussle between legitimate and illegitimate mining has worsened matters, leading to blanket bans on mining. The outcome has crippled the industries, economies of these States and livelihoods of millions. One of the most sought-after global mineral resources, bauxite, a raw material for making aluminium, still remains un-explored and un-utilised in India. Our country is blessed with the fourth largest rich bauxite deposits in the world, of about 3,000 million tonnes. Unfortunately, we have not witnessed the opening of any large bauxite mine in more than 35 years. Investments in exploration of gold and copper mines are awaited, in spite of the Supreme Court judgment to open up the sector. Given our own reserves and resources, spending billions on their import makes no sense. We can keep these reserves for another 100 years but ultimately, their sustainable and optimum utilisation is necessary for the country. Let’s look at the economic condition of a State where manufacturing has seen blanket ban. Goa’s plight
Iron ore mining ban in Goa has put the state’s economy in deep economic crisis. In Goa, mining is a matter of survival for over one-third of the state’s population. The iron ore mining ban has paralysed almost 20,000 trucks. But the biggest loss is to the economy, which is now touching over Rs 25,000 crore. The livelihood of over 100,000 people is at stake. Thousands of people employed in mining operations, which include regular and contract employees, are sitting idle. It is not just a loss to the miner; thousands of ancillary industries associated with iron ore mining are on the verge of closure. The Goa Chief Minister too shared his concern that “the economy of the country is in the doldrums because import-export balance of the country is disturbed. Restriction on iron ore mining can be attributed as major reason for decline of the economy.” Till the mining bans came into force, India produced about 200 million tonnes of iron ore and about 50 per cent was exported, making it the world’s third largest exporter of iron ore. The ban has brought down the export from 117 million tonnes in 2008-09 to 18 million tonnes in 2012-13. This is expected to fall further to 14-15 million tonnes in the current financial year. Exports have been badly affected and the loss of revenues has been massive. Once mining resumes in Goa, companies will have to go all-out to increase iron ore production, in order to recover lost ground. The loss of over $6 billion on account of the ban on iron ore export from Goa alone, has been one of the major factors responsible for worsening the current rupee crisis. The situation is so critical that the Goa Government has approached the Central Government for relief. In a written reply to the Lok Sabha on December 6, 2013, the Mines Minister Dinsha Patel stated that State Government of Goa, citing the economic hardships and loss of employment due to the ban on mining in the State of Goa, has requested the Central Government for (1) enhanced central financial assistance, (2) special relief package to the cooperative banks so that they do not become sick, and (3) a moratorium on repayment of borrowings from banks, waiver of interest and restructuring of loan packages. No one advocates illegitimate mining, but surely legitimate mining must grow. Don’t curb legitimate mining. Investments are necessary in exploration and development of natural resources to eradicate poverty and unemployment. When the Goa mining delegation met Prime Minister and asked for help, the PM said, “while environmental concerns should be sincerely addressed, all should remember that poverty is the greatest polluter”. Finance Minister P. Chidambaram’s statement “to find a way to export iron ore and restart iron ore mining” provided solace to the people. Minister of Commerce and Industry Anand Sharma too spoke on removing the ban by stating that “we don’t want the ban to continue and all mining activities are not illegal”. He stressed upon iron ore export. Plugging the gap
Amidst all this, Goa’s economy has been shaken up. The entire economic lifecycle has come to a standstill. Paralysis in iron ore mining in Goa is hurting industries and people’s sentiments. India is blessed with iron ore reserves, like Australia and Brazil, but the difference in production and outlook is immeasurable. While Australia and Brazil have ramped up their iron ore production, India’s output has fallen steeply.. Now at just 100 million tonnes, against Australia’s 400 million tonnes and Brazil’s 400 million tonnes, India’s iron ore output can really be stepped up. A developing nation like India should capitalise on the available natural resources in a sustainable manner, by bringing in large investments and simplifying policies and procedures. Mining is the only sector with the true potential to make India an economic powerhouse.
The author is Chairman, Vedanta Group
IRL Price at posting:
0.7¢ Sentiment: LT Buy Disclosure: Held
