India's Mining Sector: Towards a Sustainable and Equitable Future

21 Feb 2022
Ms Mary Abraham

Mining is an important activity for India. With 3527 mining leases for 40 major minerals, extending a total lease area of roughly 315,986 hectares, India is a major producer of crucial minerals. The mineral resource sector has the potential to impact environmental sustainability, social inclusion, and economic development.

TG Mines

The Mineral resource sector has played a vital role in the world economy and human development from time immemorial. The achievement of the United Nations' Sustainable Development Goals (SDGs) and the execution of the Paris Agreement is dependent on the sector. While the sector is diverse, it has the opportunity and potential for positive contribution to all 17 SDGs and the execution of the Paris Agreement. The sector's contribution to SDGs encompasses both, its role in advancing several SDGs as well as hindering the achievement of the SDGs and related targets. The world's population estimated to rise from over 7.8 billion to 9.6 billion by 2050 presents additional challenges on the sector in meeting the demands of the rising population and growing per capita consumption. While the introduction of global, national regulations and legislation in the last two decades has been remarkable, the implementation of the same varies greatly between regions, particularly in developing countries such as India.

Mining is an important activity for India. With 3527 mining leases for 40 major minerals, extending a total lease area of roughly 315,986 hectares, India is a major producer of crucial minerals such as chromite, iron ore, coal, and bauxite, among others. Mining contributes to 2.5 per cent of the Gross Domestic Product (GDP). The total mineral production is valued at 1,299,500 million, and 18,963,480 million of mineral exports in 2020. The mining sector plays a vital role in the national economy, employs more than half a million persons, and contributes to the country's revenue through exports, royalty (tax paid in return to the right to use), dead rent, cess, sales tax, and duties. Yet, the environmental (land degradation, land conversion, mine wastes, air pollution, groundwater depreciation, and pollution of water bodies) and social externalities associated with mining are of severe concern.1 Land-use-related impacts, population displacement and resettlement, health-related impacts, social and cultural disruption, inequality, and conflicts appear to be the most concerning social impacts of mining in India.2

The fact that much of the country's natural resources are located in forest-covered areas raises further environmental and socio-economic concerns. As one of the fastest-growing economies of the world, there is increased pressure for metals/minerals to meet the demands of an estimated 6 per cent growth in GDP, in the following decade. India's commitment to the Paris Agreement entails the requirement of crucial minerals for the transition to a lower-carbon economy. The 'Make in India' initiative for expansion of the industrial sector would further increase the mineral resources demand. Depletion of mineral reserves is an issue of concern already. Reports indicate a 15 per cent drop in iron ore production in 2018, with reserves in Goa expected to exhaust within a decade and an anticipated reduction in production from Odisha.3 All these, demand the incorporation of sustainability and equity in the sector.

Mineral Resources and Sustainable Development

The mineral resource sector has the potential to contribute significantly to the achievement of the SDGs through socio-economic benefits, foreign exchange earnings, employment and livelihood, development of infrastructure, communication, provision of vital services, and supply of raw materials for green technologies. As mentioned earlier, the mineral resource sector has the potential to impact environmental sustainability, social inclusion, and economic development. The impacts on water, land, climate and humans as well as on flora, fauna that are reliant on these resources impacts environmental sustainability. The SDG6 (Clean Water and Sanitation), SDG15 (Life on Land), SDG7 (Energy Access and Sustainability), and SDG13 (Climate Action) are affected by this sector.

The mineral sector can pose challenges in terms of impact on livelihoods and human rights, provide economic opportunities to communities near the mines and beyond. An inclusive and equitable approach will help the sector towards achieving SDG1 (End Poverty), SDG5 (Gender Equality), SDG10 (Reduced Inequalities), and SDG16 (Peace, Justice and Strong Institutions). Generation of economic opportunities is also the key towards achieving SDG8 (Decent Work and Economic Growth). There are several direct and indirect economic benefits that can be accrued through this sector. The sector can drive innovation and result in the development of infrastructure for transportation, communication and help to develop energy and water infrastructure contribution to the SDG9 (Infrastructure, Innovation and Industrialization) targets. As the sector provides raw materials critical for development there is an opportunity for collaboration (SDG17: Partnership for the Goals) within and beyond the sector to minimize waste and act as a driver for reuse and recycle (SDG16: Responsible Consumption and Production) through a circular economy approach.

The main challenge in the integration of sustainable development in mineral resource extraction and production is on account of the non-renewable and finite nature of mineral resources further exacerbated by the dependence on other resources such as water, energy, land, etc., for extraction/processing. Global primary materials consumption is expected to increase two-fold by 2060, from 89 gigatonnes (Gt) in 2017.4 Much of the mineral resource extraction is in developing countries and regions with poor human development indicators. Reinvestment of the revenue earned from mining for equity, sustainable development, maintaining the value of natural resources extracted and ensuring inter-generational equity is essential. Several studies reinforce non-renewable exhaustible mineral resources as finite shared inheritance and framing and accounting the proceeds from mineral exploitation can result in major improvements in natural resource management.5 The three principles of physical sustainability, generational equity, and global equity for achieving sustainable development are thus imperative.

Environmental Legislations and Regulations Supporting Sustainable Development in the Indian Mining Sector

The Indian mining sector is mainly governed by the Mines Act, 1952 and the Mines and Minerals Development and Regulation Act, 1957, ('MMDR'). While the amendment of the MMDR, 1957 has been a watershed moment in the country in line with the Sustainable Development Framework, several environmental regulations existed since the 1970s. Some of the early enactments towards environmental protection have been the first steps in paving the path for sustainable development in the mining sector. The government policy in India in the initial years after independence considered minerals as a 'basic' and 'strategic' importance for the country. Hence, the sector was led in the absence of many environmental and social regulations. The environmental and social considerations gained impetus in the country with the participation of India in the UN conference on Human Environment, Stockholm, 1972. Several environmental enactments were a response to the implementation of the recommendations at the Stockholm Convention.

Figure 1
Figure 1: Environmental Regulations in the Indian mining sector

The Coal Mines (Conservation & Safety) Act, 1974, aimed at improving efficiency of coal, promoting technology for reducing damage to environment, conservation of coal resources and others. Some Acts (along with their associated rules) for management of the environment, applicable to the mines include—i) The Water (Prevention and Control of Pollution) Act, 1974; ii) The Water (Prevention and Control of Pollution) Cess Act, 1977; and iii) The Air (Prevention and Control of Pollution) Act, 1981. The introduction of the Environment Protection Act (EPA), 1986 (amended in 2006) and the Forest (Conservation) Act, 1980 aimed at monitoring mining activities for the protection of the environment during all the phases of a mineral resource extraction cycle including planning, production process, and closure. These paved the first step for acknowledging natural resources and society, incorporating two of the pillars of sustainable development. The National Environmental Policy, 2006, aimed at conserving environmental resources by increasing resource efficiency, promoting intergenerational equity, safeguarding the principles of good environmental governance, and promoting environmental protection.

Globalization, other developments internationally, and the country's commitment to Agenda 21, initiated the discourse on sustainable development in various sectors of the economy. Since 1994, Environmental Impact Assessments (EIA) and Clearances were made statutory for 29 activities including mining. The Forest (Conservation) Act, 1980; the Forest Right Act, 2006; and the Land Acquisition Act, 2013 are also important regulations. The Noise Pollution Rules, 2000; Ozone Depleting Substances Rules, 2000; Hazardous and Other Wastes Rules, 2016; Solid Waste Management Rules, 2016 are applicable for environmental management of the sector.

The Sustainable Sand Mining Guidelines (2020) aim to maintain and restore the ecology of the river and other sand sources through sustainable and environment-friendly management practices. The need of circular economy for the achievement of sustainable development, gained recognition. To expedite the transition from a linear to a circular economy, 11 committees led by the respective ministries (for addressing 11 focus sectors, one of them being scrap metals) have been formed.

Benefit Sharing for Sustainable Development and Equitable Future

Benefit sharing addresses the mismanagement of resource wealth in the mineral resource-rich districts of India that continue to rank low in human development indicators, widening adverse socio-economic externalities,6 lacking alternate opportunities for economic development. Effective implementation of benefit-sharing strengthens the case for inclusive mineral development, retaining significant economic benefits in the region of mineral extraction and investing for the future.7

From the mining companies' perspective, the Company's Act, 2013 mandated companies to share profit through Corporate Social Responsibility on developmental challenges and thus contribute towards development activities for building the social capital of the region.

The Mineral Foundation of Goa (MFG), a non-profit organization founded by nine Goan mining corporations to address social and environmental externalities in the State's mining belt, has completed several development projects and worked with the State for the benefit of the mining communities in Goa.

Sustainable development in the mining sector in India was first formally mandated with the MMDR amendment in 2015, following the recommendations of the Committee led by Anwarul Hoda in 2005. This led to the development of the District Mineral Foundations (DMFs) for driving sustainable development of the region and the people affected by mining. The creation of the DMF has been one of the most important steps towards institutionalizing benefit sharing in the Indian mining sector. The Act was further amended in 2020 to sustain mineral production and in 2021 to further boost mineral extraction.

The National Mineral Policy, 1993, an important legal framework for the mines and mineral sector stipulates provisions for regulation of minerals, reviewed as the National Mineral Policy, 2008 for the first time incorporated the need for sustainable mining to preserve and augment the exhaustible mineral reserves and optimal utilization of natural resources. It established all mining to be undertaken within the comprehensive Sustainable Development Framework, which includes guiding principles for effective closure of mines, with appropriate reclamation/rehabilitation for maintaining the ecological condition. The National Mineral Policy approved in February 2019 incorporates the public trust doctrine, intergenerational equity principle, and ownership of natural resources as commons. It holds the State as the trustee on behalf of the people to ensure future generations receive the benefit of inheritance calling for stringent regulations to ensure environmentally sustainable mining practices incorporating social and economic considerations.

Several jurisdictional deliberations have also led to the suspension of mining leases, compensation, and reassessment of environmental and social considerations often promoting sustainable development. These include the amendment of the MMDR, 1957; formulation of the National Mineral Policy (2019); incorporation of sustainable development activities in mining regions through the Maharashtra Mineral Development Fund (MDF), 1999; Odisha Mineral Bearing Areas Development Corporation (OMBADC), 2014; the Comprehensive Environmental Plan for Mining Impact Zone (CEPMIZ), 2014; the Goa Mineral Ore Permanent Fund Trust Scheme (2014) among several others. To ensure Intergenerational Equity (IE) and Sustainable Development, Goa's Permanent Fund—the first-of-its-kind in India, obligating the State and the Legislature on behalf of present-day and future generations to protect current resource wealth and ensure biological survival.

The Supreme Court judgment (1997), of 'Samata vs. State of Andhra Pradesh,' for the first time mandated 20 per cent of profits from mining for the development of mining-affected regions.

The Way Forward

Despite India's longstanding institutions for environmental protection, regulatory violations, poor implementation of environment and community rights, over-extraction, and illegal mining continue to anguish the sector.8 Modest experience with benefit-sharing highlights inefficient management of funds, underutilization, inadequate participation of mining communities, lack of transparency, and need for enhancing governance.9

The central role of political and administrative bodies has led to DMF funds to be considered as Government funds leading to poor utilization for the benefit of the mining regions. Several funds including the DMF, CEPMIZ, OBMADC, etc., suffer from the above. Transfer of DMF funds for other activities has led to the Government order (2021) reiterating the allocation of DMF funds for mine-affected regions and people. These demand adequate participation of the community affected by mining especially in decision making, transparency in the use of funds, enhanced capacities of local institutions, and good governance. Local institutions are inadequately represented or lack the capacities in decision making, planning, implementation, and monitoring. The Ministry of Mines in January 2019 recommends the engagement of Gram Sabhas in the planning activities of the DMF and several state DMF laws necessitate the same. Mining-affected people in most remote areas of India often lack access to technology, adequate information of these funds/initiatives,10 and are unaware of their rights. Local institutions have low awareness, and lack the capacities to engage. While the legal institutions are in place enhancing the capacities of local institutions, and human capability is crucial and needs to be mandated within the sustainable development initiatives.

Transparency in the use of the funds for sustainable development is also questionable with very less information on the public domain regarding funds such as the Goa Mineral Ore Permanent Fund Trust, the CEPMIZ and even the DMF in many states. India is yet to adopt the Extractive Industries Transparency Initiative (EITI), the global standards of good governance ensuring transparency and accountability of the sector.

Regulations mandate socio-economic rehabilitation and environmental restoration of mined-out areas, especially post-closure of mines. Yet, there is a lack of evidence on the implementation of the same. Adequate funding provisions for post-mining rehabilitation and strict regulation of the same should be ensured. Appropriate monitoring mechanisms with community-based monitoring at the regional level are recommended in the mineral production, environmental and social regulation and sustainable development initiatives.

Stringent regulatory mechanisms are required in the sector. Illegal mining is a violation of Section 21 of the MMDR Act. Reports estimate the existence of almost 115,000 illegal mines. Poor implementation of environmental regulations in the legal mines continues.

Resource efficiency and circular economy can reduce the pressure on mineral resources through structural changes and technology while maintaining the growth potential. Life cycle management addresses the renewability of minerals and associated environmental issues during extraction, production, use, and waste management. Closing the resource loop through recycling, remanufacturing, slowing the resource loop through reuse, narrowing the resource flow through increased material productivity, improving assets, and changing the individual behaviour is necessary for the protection of virgin resources and efficient management of supporting resources.

To conclude, a holistic approach harmonizing all the facets of sustainable development in the mining sector must be aligned by the Government and the Industry.

Footnotes:

[1] Ghosh, 1989; Bina Agarwal, 1992; Tiwari & Dhar 1994; Dhar, 2000; Ghose, 2000
[2] Saha et al., 2011; Singh & Singh, 2016; Bisht & Gerber, 2017
[3] FICCI, 2018
[4] OECD, 2021
[5] Basu & Pegg, 2020
[6] Basu and Pegg, 2020; CSE, 2011
[7] Söderholm & Svahn, 2015
[8] Shreshta Banerjee, 2020
[9] CSE, 2018; OXFAM, 2018; Joyita Ghose, 2018
[10] CSE, 2018

Article contributed by Ms Mary Abraham, Mu Gamma Consultants Pvt Ltd.

Themes
Tags
Energy transitions
Coal mining
Sustainable energy use
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