Sugandh Juneja

1. Sugandh Juneja Sharing the Wealth of Minerals

2. A new geography

7. Rich lands, poor people: Way ahead • New 'social and environmental' contract with the mining industry • The new environmental contract: • Protect areas for ecological, water and livelihood security: Go and No-go areas • Codify detailed environment management regulations for mining, including reframing rules for mine closure • Restructure and strengthen regulatory institutions – with accountability

8. Rich lands, poor people: Way ahead • The new social contract: • Let the people decide: mining should not take place without consulting the affected people (FPIC) • Share substantial benefits with local communities

9. Global practices on profit sharing with communities • Papua New Guinea's Mining Act 1992-- provision for establishing a Development Forum to consult affected people and decide on a profit sharing mechanism. • Community negotiates and therefore, profit sharing provisions varies from mine to mine. • The Act also makes provision for the mining companies to share at least 20 per cent of royalty payments with the landowners of the affected area

10. Global practices on profit sharing with communities • Canada makes special provisions for aboriginals and land owned by them • Land Claim Agreements (LCAs) grant special mining rights to aboriginals and define the area for them and mineral rights • There is a royalty sharing provision in the LCA where the government is to pay them 5% of the royalties • Impact Benefit Agreements with companies – negotiated on case by case basis

11. Global practices on profit sharing with communities • South Africa's Mineral and Petroleum Resources Development Act, 2002 grants communities the 'preferential right' to prospect/mine on land owned by them. They use this 'preferential right' to negotiate benefit sharing with companies. • Norway operates a petroleum fund which receives all oil revenues (royalties, taxes and state direct financial interest) of the country. The idea of the fund is to provide income flows for 'development' even after the oil reserves get depleted • Alaska give US$ 1000/ annum to every person as part of profit sharing from petroleum exploitation

12. Global practices on profit sharing with communities • Australia is another country that recognises the special rights of aboriginals • Under the Land Rights Act, an Aboriginal Benefit Reserve (ABR) is established by the state government which receives and disburses the mining royalties • Under the Native Title Act, people are given the right to enter into negotiations with the mining companies. Indigenous Land Use Agreements are signed, which are legally binding for the parties, and include provisions for benefit sharing

13. Draft MMDR Bill, 2011 • Mines and Minerals (Development and Regulation) Act 1957 – for development and regulation of the mining industry • Mineral Concession Rules (MCR) and the Mineral Conservation and Development Rules (MCDR) • MMDR amended 4 times – first three to increase the control of the government over mining. The last one done in 1999 to allow large-scale privatisation • MMDR, 2011 promotes large-scale private mining but has many provisions for addressing the social, economic and environmental issues associated with mining

14. Draft MMDR Bill, 2011 & Profit Sharing • Profit sharing introduced in India for the first time under MMDR Bill, 2011 • Coal companies to pay 26 per cent of their net profit while non coal companies (major minerals) are to pay an amount equal to royalty as annual compensation • For companies mining minor minerals, this percentage of profit sharing to be decided by the state in consultation with the proposed National Mining Regulatory Authority • The lease holder is also to allot at least one non-transferrable share to each person of the affected families

15. Draft MMDR Bill, 2011 & Profit Sharing • The state government is also to ensure that monetary benefit flows to the affected people • The state government is to identify directly or indirectly affected people/families by mining operations, before these operations begin, cut off date introduced • The District Mineral Foundation (DMF), to be constituted by the state government, is to function as a trust fund • The main function of DMF is to distribute monetary benefits to affected persons/families holding occupation, usufruct or traditional rights • The payments can be quarterly or annually

16. Draft MMDR Bill, 2011 & Profit Sharing • How much monetary benefit is to be given to which category of affected people is to be decided by the state government • This amount, on an average daily basis, is not to be less than the amount payable to a person under NREGA • The DMF is to be managed by a Governing Council (GC) • The GC is to consist of: • District magistrate (Chairperson) • District mining officer (Secretary) • District panchayat or council's chairperson • All mine lease holders in the district • Head of local offices of concerned departments

17. Draft MMDR Bill, 2011 & Profit Sharing • Representative of IBM • Representatives nominated by DM in consultation with affected people (at least three) • The GC is to: • Draw an annual budget of the DMF with the available money • Approve disbursal of payments to affected people • Approve other expenditures

18. Other benefits • Other compensations under the draft include: • Prospecting Licence (PL) holder is to pay compensation to person holding occupation rights of surface land • PL holder also to pay compensation for damage to land • Mine lease holder to provide employment and other assistance as under the Rehabilitation and Resettlement (R&R) policy of the concerned state to people holding occupational, usufruct or traditional surface rights

19. Other benefits • The state is to assess any damage to land on the termination of a mineral concession. Then it is to determine a compensation amount payable to people holding occupation, usufruct or traditional surface right. This compensation is to be decided in consultation with the affected people • A CSR document is also to be submitted with the mining plan. This is to have a scheme for the annual expenditure on socio-economic activities in and around the mine lease area

20. Consulting local community • Gram sabha or district council in fifth and sixth schedule areas and the district panchayats in non-schedule areas to be 'consulted' before inviting bids for prospecting licence or mining lease and for the mine closure plan. • Incomplete definition of 'consultation'

21. Profit Sharing and mining districts • If profit sharing provision is implemented, at least Rs 10,500 crore will be generated as share of profits for affected communities • The top 50 mining districts, in terms of value of mineral production, will get Rs 9,000 crore • Every directly affected persons (estimated to be 2.5 million) can get Rs 38,000 per year which is more than five times the poverty line in the country • For instance, Jharkhand can get to the tune of Rs 1,150 crore as share of profits from mining

22. Profit Sharing and mining districts • Nine districts of Jharkhand are among the top 50 mining districts of India • Dhanbad will get enough money as share of profits from mining to give every household, affected or not, in the district Rs 7,400 annually • Hazaribagh will get Rs 200 crore as profit share. Every household can be given Rs 5,800 annually • Singhbum (W) produces more than Rs 1,000 crore worth of minerals. Every directly affected person in the district will get Rs 18,000 annually • In Chatra, every directly affected person will get Rs 20,000 annually

23. Will it affect the profitability of companies?

24. Way Ahead • Mining and ecological carrying capacity: this provision should not be looked at as a licence to mine anywhere and in any measure • Regional impact assessments should be made mandatory to decide the extent of mining • EIA and public hearing process needs to be strengthened • Identifying beneficiaries: Identifying directly and indirectly affected people will prove a challenge. Gram sabha should be involved in the consultation to identify the beneficiaries • Direct payments should be restricted to people whose livelihoods have been affected/lost • For old mines, this identification poses a bigger challenge due to in and out migration. A district level fund to be devised with targeted expenditure

25. Way Ahead • Who should benefit?: Define directly/indirectly affected people with less scope for 'manipulation'. • The list of beneficiaries should be such that it does not dilute the entire principle of profit sharing and individually people don't benefit much • Where to spend?: The money should not just be spent on the present. Some to be kept for future use. Broadly, the money should be used for three categories: • To reduce present impoverishment • To build future livelihoods (education, health, livelihood trainings, etc.) • To invest for future – after mine closure

26. Way Ahead • Who should administer?: The composition of DMF is skewed • The GC should be run and managed by representatives of the affected communities. There should also be representatives of district government and mining companies • DMF should be open to state and public audit • The administrative cost of DMF should not exceed 5% of the total annual funds • All financial and non-financial information regarding DMFs should be put in public domain (website, etc.)

27. Way Ahead • Let the people decide: Any mining activity should take place only after consultation with the affected communities • Mine closure: Retrospective mine closure provision should be incorporated so that all companies who have not carried out closure properly can be fined • Exit clause: A provision enabling review of the provisions of the act every 5 to 10 years should be incorporated.

28. Thank You