Minerals, natural resources and the commons are a shared inheritance, usually owned by the state as a trustee for the people and especially future generations. It is our duty to ensure future generations inherit at least as much as we did. If we fulfill our duty, we may enjoy the fruits of our inheritance. A loss is a loss to all of us and all our future generations.
If we mine and sell our mineral wealth, we must ensure zero loss, ie. capture of the full economic rent (sale price minus cost of extraction, cost including reasonable profit for miner). All the money received from our minerals must be saved in a Permanent Fund like Norway. And only real income (after inflation) from the Fund must only be distributed as a Citizen’s Dividend, a right of ownership.
This is palpably fair to all, follows principles of private property and its simplicity makes it feasible and a difficult benchmark to beat. As a political settlement, a large majority should support it.
This work started in Goa, India, and is currently most advanced at the national level in India. The intergenerational equity principle, precautionary principle, polluter pays principle and the public trust doctrine have been ruled part of the core of the Indian Constitution. Reflecting this, there is growing acknowledgement at the national level that minerals are indeed a shared inheritance.
1. Supreme Court of India
In the Goa mining case (Goa Foundation vs Union of India & others, WP(c) 435 of 2012), the Supreme Court of India set up an expert committee to advise it on how to implement the intergenerational equity and sustainable development principles. Goa Foundation made a detailed submission to the expert committee recommending a Permanent Fund and a cap on extraction on grounds of intergenerational equity & weak sustainability.
The interim report of the expert committee included these recommendations. Based on the report, the Supreme Court ordered a cap on iron ore mining in Goa of 20 million tons per annum (“mtpa”), as well as the establishment of a Goa Iron Ore Permanent Fund, financed by a new levy of 10% of the sale value of iron ore. To our knowledge, this is a global judicial precedent.
2. Ministry of Environment, Forests & Climate Change, Government of India
The Supreme Court gave the expert committee a year to present a final report. The final report of the expert committee recommended not only the continuation of the Goa Iron Ore Permanent Fund but also the extension of the idea to all iron ore mining in India. It recommended a higher cap of 30 mtpa. It stated:
“The committee therefore is of the view that a State Iron Ore Permanent Fund, on the lines of Goa Iron Ore Permanent Fund, should be created in other mineral bearing States of the Country.”
“As far as intergenerational equity is concerned many countries have tackled the issues by creating a permanent equity fund or an endowment for this purpose, while extracting exhaustive and non renewable resources like oil and coal (Fossil fuels) for investment in creating infrastructure and assets, for future generations. A splendid example of this would be that of Norway’s “Sovereign wealth fund” from North sea oil revenues which runs into billions of dollars. Likewise the State of Alaska in U.S and Alberta in Canada and Botswana in Africa have created funds out of their oil and Natural Gas and Mineral revenues.”
In response, the Ministry of Environment, Forests and Climate Change has stated in its affidavit of 23-Sep-2015:
“4. That it is also submitted that the report of the six member Expert Committee constituted by Hon’ble Supreme Court for conducting a Macro EIA Study on what should be the ceiling of annual excavation of iron ore from the State of Goa considering its Iron Ore resources and its carrying capacity keeping in mind the principles of sustainable development ad inter-generational equity and all other relevant factors has been examined in MOEFCC. It is noted that the Committee has made several recommendations on carrying capacity, Goa iron ore permanent fund, intergenerational equity, dump mining and ecological restoration of dumps etc. The Ministry is in agreement on the recommendations of the Committee.”
3. Ministry of Finance, Government of India
The Government of India, in its Economic Survey 2016–17, Volume 1, Chapter 13 (on page 297) had explained the new perspective forming for minerals:
“13.46 One way to increase citizens’ participation is via creation of a dedicated Fund to which all mining revenue must accrue. The assumption here is that minerals are part of the commons, owned by the state as trustee for the people — including future generations. Therefore, the revenue from the natural resources should be saved in a non-wasting asset — in a Permanent Fund. The real income accrued by the Fund can be redistributed to citizens affected by and having a stake in the extraction of the resources. (Box 1)”
4. Ministry of Mines, Government of India
In another public interest litigation dealing with illegal iron ore mining in the state of Odisha (Common Cause vs Union of India & Others, WP(c) 114 of 2014), the Supreme Court of India discussed Intergenerational Equity and ordered the review of the National Mineral Policy.
The KR Rao Committee was formed to draft the new policy. Goa Foundation sent a detailed set of recommendations explaining the constitutional grounds for viewing minerals as a shared inheritance, the rationale for recommending caps, zero loss and zero waste mining, permanent funds and citizen’s dividends, coupled with a wealth protecting control system including fit & proper person tests and radical transparency.
Goa Foundation, mines, minerals & People (mm&P, the largest mining CSO alliance in India), Common Cause (the petitioner in the Odisha litigation) and the Goenchi Mati Movement (which advocates these principles in Goa) started a campaign. A standard letter was created, which was sent by Oxfam India, MKSS, Aruna Roy, Nikhil Dey and a number of other organizations and individuals.
The draft of the National Mineral Policy released for comments on 10-Jan-2018 says:
“10. INTER GENERATIONAL EQUITY
There is a need to understand that natural resources, including minerals, are a shared inheritance where the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance. State Governments will endeavour to ensure that the full value of the extracted minerals is received by the State. However, a disaggregated approach in respect of each mineral requires to be adopted considering aspects like reserves/ resources and potential for reuse through recycling, which are relevant and suitable in the Indian context.
11. INTER MINISTERIAL MECHANISM FOR SUSTAINABLE DEVELOPMENT
An inter-ministerial body with members like MoM, MoES, MoEFCC, States at Ministerial and Secretariat level, may need to be constituted to institutionalise a mechanism for ensuring sustainable mining with adequate concerns for environment and socio-economic issues in the mining areas, and to advise the Government on rates of royalty, dead rent etc.
This proposed mechanism or any other institutional process can also decide the limits on the extent of mining activities that should be permitted which would, inter alia, involve undertaking a detailed study for assessing what should be the state-wise/region-wise ceiling of annual excavation of minerals, considering the availability of mineral resources, the carrying capacity of the region, and the macro environmental impact on the region while also keeping in mind the principles of sustainable development and intergenerational equity and all other relevant factors.”
In response, a change.org petition was started, which has over 18,000 signatures so far. The final policy is awaited.
There is growing acknowledgement within India that minerals are a shared inheritance. This perspective views mining as the conversion of mineral common wealth into other investments, also a part of the commons. After ensuring the capital is held intact, the income should ideally be distributed equally to all as owners. This growing perspective offers the possibility of a new social contract, one where the people are truly stewards of natural resources for future generations. Can others catch up to India?
Rahul Basu is the Research Director of Goa Foundation, an environmental NGO in India. The Future We Need is a global movement asking for natural resources to be viewed as a shared inheritance we hold as custodians for future generations. This work is based on the practical work of the Goa Foundation.
Whose Mine Is It Anyway is a campaign to make government finances and national income statistics treat mining as the sale of minerals. Read Mitigating the Resource Curse by improving Government Accounting and Government Accounting and the Resource Curse — Response to FAQs.