India: Minerals are a Shared Inheritance

India’s National Mineral Policy 2019 says: “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.”

This is acknowledgement that (i) future generations have a right to inherit the corpus of the trust, (ii) states are trustees, not proprietors, and must endeavour to keep the trust corpus intact, and (iii) since mining is the sale of minerals, losses must be avoided (full value received) in order to keep the trust capital intact. Importantly, India’s finance and environment ministries also support this perspective.

The policy also acknowledges that no-go areas must be established, caps on extraction are required to ensure future generation also have access to minerals and mining income, caps on extraction are required to limit the environmental damage, and the need for an end-to-end mineral supply chain control system, beginning with a public resource inventory database and mining tenement registry.

Capital maintenance is the overriding goal

The core problem with our current civilization is that we are treating natural resources as “revenue” generators, and are happily consuming them. This is fueling a mad rush to extract to access the easy money from mining. In the end, future generations are being cheated of their inheritance, which is also endangering civilization.

If we see natural resources as a shared inheritance, a part of the public trust whose beneficiaries are the people and especially future generations, then maintaining the corpus of the inheritance is primary goal. States, as trustees over natural resources, may not deal with trust assets as proprietors.

This view raises a different set of questions: Why are we selling our family silver? Is this the best time to sell? Are we making a loss when we sell our family silver? Are we saving the proceeds for our future generations? How much of our mineral inheritance are we keeping for our future generations to exploit?

Mining ends with the sale of mineral wealth in exchange for financial wealth. We must ensure (i) zero loss mining, ie. capture of the full economic rent (sale price minus cost of extraction, cost including reasonable profit for miner); (ii) like Norway, everything we receive for our minerals must be saved in a Future Generations Fund; and (iii) like Alaska, only the real income (after inflation) from the Fund may be distributed only as a Citizen’s Dividend, equally to all as a right of ownership.

The shared inheritance perspective makes clear that the principal problem is protecting the corpus of the trust against loss while investing for real income. This then requires a laser focus on #ZeroLoss, driving our call for zero loss to be an explicit goal in the laws, a high security control system, fit and proper person tests and radical transparency.

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 by different arms of the national government that minerals are indeed a shared inheritance.

Supreme Court ordered review

In a 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 the Intergenerational Equity Principle in the context of a demand for a future generations fund and a cap on extraction and ordered the review of the National Mineral Policy 2008.

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 outcome

India’s Ministry of Mines has just posted the National Mineral Policy 2019 on its website. The bad news is that there’s been erosions in social and environmental protections. The good news is that there have been adoption of key ideas that we have been advocating, which may provide a foundation for further advances.

Some of the positives in the final policy:

  1. “Natural resources, including minerals, are a shared inheritance where the State is a trustee” is in the policy vision. This incorporates the Public Trust Doctrine, the Intergenerational Equity Principle as well as the idea that natural resources are a commons. The finance and environment ministries also support this perspective.
  2. Rights of future generations is included: “the state is the trustee on behalf of the people to ensure that future generations receive the benefit of inheritance”
  3. Recognition of no-go areas (Precautionary principle), but with a caveat: “The Government shall identify such areas that are critically fragile in terms of ecology and declare as ‘in-violate areas’ or ‘no-go areas’ out of bounds for mining. In order to achieve a better semblance between mineral based development and environment, there shall be an endeavour to create Exclusive Mining Zone (EMZ) with prior in-principle statutory clearances demarcated for the mineralized belt/zone to avoid conflict of interest and to curtail delay in commencement of mining operation.”
  4. Creation of a mechanism for extraction caps: “This proposed mechanism shall 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.”
  5. #ZeroLoss makes an indirect entry: “State Governments will endeavour to ensure that the full value of the extracted minerals is received by the State.”
  6. Resource Inventory Database to be “maintained for open dissemination as a public good”;
  7. Mining Tenement Registry “shall be a web-based system for public viewing integrated with GIS, such that information could be shown spatially in the form of map based service.”
  8. End-to-end Control system: “Provisions shall be made for end-to-end accounting of mineral/ore in the supply chain with use of IT enabled systems.” Satellites are also mentioned (and are in use).

Some things missing, problems:

  1. Free, Prior and Informed Consent (FPIC) is still missing
  2. Implementation of the Samata judgment which asks for 26% of mining profits to be given to indigenous people for extraction on their lands
  3. Treating mining as a sale, and therefore the proceeds are capital, not “revenue”. “Revenue” appears wrongly twice.
  4. What should be done with the proceeds of mining — saved for future generations? Spent? Invested?
  5. Radical transparency — everyone should be able to verify that she has done her duty by her future generations.
  6. Global best practices (other than Doing Business)

Global support

Earlier this year, Publish What You Pay, a 700+ member strong global mining civil society alliance, had its Global Assembly. The communique from the Global Assembly calls on “governments, companies and intergovernmental institutions including multilateral development banks to acknowledge and explore, where citizens demand this, the concept of oil, gas and minerals as a shared intergenerational inheritance”

Conclusion

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?

Who are we?

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.