Mining – India 1
1. India copper futures set to open up, gold flat 1
2. Villagers oppose construction work at Rungta mines 2
3. Royalty on iron ore in India likely to be revised upwards 3
4. Mangalore: Western Ghat Task Force Recommends Banning of Mining in Ghats 4
5. Chhattisgarh’s income from minerals royalty rises 20 percent 5
Mining – International 5
6. Villagers fail to get judicial review of gold mining report 6
7. Brazil's iron ore sales tumble amid China port woes 6
8. Chinalco holds fire on refinery plan 8
9. Uranium mining firm asks for appeals court review 9
10. BHP May Need to Spend $10 Billion on Potash Mine, Goldman Says 9
11. Fire kills at least 36 at old S.Africa gold mine 10
12. Native Title Tribunal rejects first mine application 12
Other News 13
13. SC refuses to stay land acquisition process for Ambani SEZ 13
14. Special Economic Zones: 14
15. Socio-economic Implications 14
16. UN indigenous forum calls for consultations on patents 19
17. Sanctuaries can save 90 p.c. bird species as climate changes 20
18. Kofi Annan: 300,000 people die every year from climate change. Nonsense. 21
Mining – India
India copper futures set to open up, gold flat
Tue Jun 2, 2009 9:53am IST
-Text+MUMBAI, June 2 (Reuters) - India's copper futures may open slightly higher on Tuesday, extending the previous session's 5 percent rise, tracking overseas gains on increasing signs of a pickup in the global economy, analysts said.
Shanghai copper futures opened 3 percent higher, while London futures held near seven-month highs near $5,100, underpinned by data suggesting that the world is pulling out of recession. See [ID:nSP470993]
The benchmark June copper MCCM9 on the Multi Commodity Exchange of India (MCX) ended 5 percent stronger at 240.70 rupees in the previous session.
It may open at around 241.50 rupees per kg, said Harish Galipelli, head of research with Karvy Comtrade. Follow-through buying may be seen later in the session, he added.
"Copper's support is placed at 233-234 (rupees) levels as long as this level holds this support level, expect prices to edge higher towards 249-250 levels and find resistance there," said Paras Sejpal, an analyst with Transmarket Group.
June zinc MZIM9 ended 2.6 percent higher at 74.80 rupees and lead for June delivery MLDM9 ended 4.2 percent higher at 77.35 rupees per kg.
GOLD:
India's gold futures may open flat tracking overseas leads, analysts said.
The benchmark August gold MAUQ9 closed 0.5 percent down at 14,808 rupees in the previous session.
The contract is likely to open at 14,800 rupees per 10 grams, said Kunal Shah, assistant vice-president with Nirmal Bang Commodities.
Overseas gold, that guides the domestic market, was steady as investors continued to track moves in the dollar. See [ID:nT180707].
An improvement in equity markets as well as signs of economic recovery globally may dim the metal's appeal as a safe-haven investment, they said. "One needs to be cautiously bullish on gold now because of rising equity markets," said Shah.
Gold may trade in the range of 14,650-14,930 rupees, said Abhishek Chauhan, technical analyst, Angel Commodities.
(Reporting by Siddesh Mayenkar; Editing by Ramya Venugopal)
http://in.reuters.com/article/domesticNews/idINBOM47590620090602?sp=true
Villagers oppose construction work at Rungta mines
BS Reporter / Kolkata/ Angul June 02, 2009, 0:11 IST
The efforts of Rungta Mines to restart construction work for its two million tonne per annum steel plant after a gap of almost five years in Orissa’s Dhenkanal district has faced resistance from the affected villagers of Hindol area in the district.
The affected people opposed the construction work of Rungta Mines due to the absence of a rehabilitation package and peripheral development work by the company. They opposed the company’s efforts to build a compound wall around 560 acres of land it had acquired.
The affected people have sent a memorandum to the Dhenkanal district collector, containing their 11-point charter of demands.
In the memorandum, the people condemned the company’s effort to construct the compound wall without taking the affected people into confidence. The affected people have warned of intensifying their stir in future if Rungta Mines goes ahead with the construction of the wall without announcing any rehabilitation package.
The villagers demanded the convening of an immediate session of the Rehabilitation and Peripheral Development Advisory Committee (RPDAC) to decide on issue like upward revision of land value, conservation of all natural water resources in the region as well as comprehensive rehabilitation and peripheral developmental packages.
A meeting of the affected villagers and company officials was held under the chairmanship of Bijan Kumar Thumb, the district land acquisition officer. At the meeting, it was decided to form a unified committee of the villagers which will take the issues with the company and the district officials.
According to a district official, Rungta Mines had signed a MoU (memorandum of understanding) with the Orissa government to set up a two million tonne capacity steel plant.
‘The company has already acquired 560 acres of land out of its total requirement of 721 acres. Rungta Mines had almost suspended its construction work for the last five years as no coal block was allocated to the company.
Following the allocation of the coal block, the company attempted to restart construction at the project site on May 22 this year which was resisted by the affected villagers.
http://www.business-standard.com/india/news/villagers-oppose-construction-work-at-rungta-mines/359755/
Royalty on iron ore in India likely to be revised upwards
Tuesday, 02 Jun 2009
The Hindu reported that the India government may soon increase the royalty rates on extraction of minerals like copper, iron ore and zinc to enrich the exchequers of states possessing these resources.
Top government official said a Committee of Secretaries is scheduled to meet in the first week of June to finalize the new royalty rates after which the matter would be placed before the Cabinet for final approval.
Mr Bijoy Krishna Handique minister of mines Minister, who took charge of the ministry on May 30th, said the revision of royalty rates is on his top priority list.
As per report, the royalty rates on minerals are normally revised every 3 years. Last assessment was done in 2004 so the new revision is due since 2007. The ministry has been working on the proposed changes in royalty for the last 2 years. However, the quantum of the proposed hike could not yet be ascertained.
However, mineral rich states like Jharkhand and Chhattisgarh earn in the range of INR 1,500 crore per annum to INR 4,000 crore per annum from royalties.
Royalty on minerals are calculated on the mineral content in ore extracted. As per the last assessed rates, on iron ore lumps a mining firm pays up to INR 27 per tonne as royalty. On iron ore fines it shells out up to INR 19 per tonne.
(Sourced from The Hindu)
http://steelguru.com/news/index/2009/06/02/OTY3NTk%3D/Royalty_on_iron_ore_in_India_likely_to_be_revised_upwards.html
Tuesday, June 02, 2009 10:16:49 AM (IST)
Mangalore: Western Ghat Task Force Recommends Banning of Mining in Ghats
Daijiworld Media Network - Mangalore (SP)
Mangalore, Jun 2: Western Ghats Task Force has recommended to the government to enforce total ban on any kind of mining activity in the Western Ghats, because of the fragile and sensitive nature of the biodiversity and environment of this sector, said Western Ghats Task Force president Anant Hegde Ashisara. Addressing a press conference here on Monday June 1, he said the government has not issued any fresh mining lease after the recommendation was made.
The Task Force, set up about six months ago, will be submitting an exhaustive report to the government on the rivers originating in the Ghats, conservation of hyper sensitive areas of the region, biodiversity, protection of wild life etc., which will include appropriate recommendations on these aspects. A preliminary report had been submitted to the government three months ago and by June end, the integrated report will be submitted to the Chief Minister, he explained.
Schemes are being framed to protect vegetation and biodiversity, including the protection of Devarakadu and Naga Banas in the state. A survey on them is in progress. The government has set aside a sum of two crore rupees for this project, he revealed.
The task of identifying highly sensitive areas as far as biodiversity and environment are concerned is in progress. There are over a hundred such spots, spread over nine districts of the state, including Yana in Uttara Kannada district, Ambarugudda near Kodachadri Hills, Amnaghatta near Hosanagar etc., which have already been declared as sensitive regions. The task of identifying such spots in Udupi and Dakshina Kannada districts is in progress, he said.
During June this year, a programme of planting of two crore saplings in association with the forest department will be held. The Task Force is also examining the mini hydel power plants that are either already operational or under construction. The Task Force is collecting information about the forest department clearance they have obtained, Hegde explained. He also said that smuggling of invaluable medicinal herbs from the Western Ghats to Kerala and foreign countries is being undertaken. To create awareness among the local people and officials and explain to them the plans of action about the conservation of medicinal herbs and plants, a special workshop is being held in Ujire shortly, he revealed.
http://www.daijiworld.com/news/news_disp.asp?n_id=60663&n_tit=Mangalore:+Western+Ghat+Task+Force+Recommends+Banning+of+Mining+in+Ghats
Chhattisgarh’s income from minerals royalty rises 20 percent
June 1st, 2009 - 9:06 pm ICT by IANS -
Raipur, June 1 (IANS) The Chhattisgarh government Monday said its royalty earnings from minerals rose 20 percent in 2008-09 to Rs.1,237 crore.
“The state had made earnings of Rs.1,237.29 crore from minerals in 2008-09, comparing to Rs.1,028.38 crore in 2007-08, registering an overall 20 percent increase,” an official statement said.
The mineral-rich state, which has massive coal deposits in its northern region and iron ore deposits in southern Bastar region had earned Rs.832.35 crore in 2006-07 and Rs.737.85 crore in 2005-06 as mineral royalty.
The state government is now seeking “value-based” royalty on coal and iron ore.
“The state is getting just Rs.18 per tonne as royalty on iron-ore. While after value addition, the steel manufacturers are selling the product for about Rs.30,000 a tonne,” Chief Minister Raman Singh had said last month.
http://www.thaindian.com/newsportal/business/chhattisgarhs-income-from-minerals-royalty-rises-20-percent_100199564.html
Mining – International
Tuesday June 2, 2009
Villagers fail to get judicial review of gold mining report
KUALA LUMPUR: The High Court has dismissed a leave application by four residents of Kampung Bukit Koman in Pahang for a judicial review of an environmental impact assessment (EIA) report on a gold mining project in Raub.
High Court judge Justice Lau Bee Lan dismissed in chambers the residents’ application for a judicial review against the Department of Environment director-general’s approval of the preliminary environmental impact assessment report dated Jan 13, 1997, for the proposal to mine gold with the use of cyanide in Bukit Koman.
She said the application, which cited the director-general of the Department of Environment and Raub Australian Gold Mining Sdn Bhd as respondents, was “out of time” as it was filed in March 21, 2008, more than 11 years after the EIA report had been approved.
She said there had been an inordinate delay in filing the application for a judicial review.
The judge also pointed out that the applicants had six instances to file the application but had failed to do so. The court also dismissed an order against Raub Australian Gold Mining to present a new and detailed EIA report before continuing their mining activities.
The residents’ counsel, Jessica Ram Binwani, said she would file an appeal this week after receiving a resounding “yes” from about 50 residents who were present in court, when asked if they wanted to appeal the decision.
The leave application was filed on March 21 last year by Wong Kin Hoong, Chong Sow Pin, Hue Fui How, and Mustapha Hussin, in representing the residents of Kampung Bukit Koman, who claimed that mining using cyanide to extract gold had damaged their health.
Datuk Cecil Abraham, S.Nathan-Balan and Sunil Abraham appeared for Raub Australian Gold Mining; Nizam Zakaria from the Attorney-General Chambers represented the director general; while Karina Yoong and Jessican Binwani appeared for the four applicants.
http://thestar.com.my/news/story.asp?file=/2009/6/2/courts/4025540&sec=courts
Brazil's iron ore sales tumble amid China port woes
Mon Jun 1, 2009 10:49pm EDT
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SEOUL, June 2 (Reuters) - Iron ore exports from Brazil fell in May to their lowest level in 2009, amid persistent port congestion problems and surging inventories of the steelmaking ingredient in its biggest overseas market, China.
Brazil, the third biggest iron ore exporter to China after Australia and India and also home to the world's top iron ore miner Vale (VALE5.SA), said on Monday its May iron ore exports fell to 15.3 million tonnes, down 35 percent from April and 56 percent from a year ago. [TABLE-COMMODITY-BR]
It was the first monthly decline since February and comes as China, where Brazil sells around half of its iron ore exports, struggles with severe port congestion problems following record imports of iron ore for a third consecutive month in April.
"Heavy rains in the north of Brazil and port congestion in China could have had a negative impact on Brazilian iron ore exports, but the main reason...is likely lower iron ore demand from China due to high steel and iron ore inventories," Goldman Sachs analyst Marcelo Aguiar said in a note.
Iron ore stocks at China's major ports rose to 75.5 million tonnes in May and its two largest iron ore ports, based in the eastern province of Shandong, held close to their maximum stock capacities. [CN-IRON-STOCKS]
The increased imports were attributed to tumbling iron ore prices and cheap freight costs, making most of China's high-cost domestic iron ore output less competitive.
Roughly half of China's iron ore mines may have shut down since prices dropped, opening the door for Low-cost producers to expand their market share in the world's biggest steelmaking country, an executive at global miner Rio Tinto (RIO.L) (RIO.AX) said in late May. [ID:nHKG256795]
However, some analysts and traders expect record imports would taper off in the coming months, as soaring freight costs .BADI have made imports expensive and as China seeks to rein in steel production.
China, which has overcapacity of more than 100 million tonnes and made 170 million tonnes of crude steel between January and April, has said it would reduce output by 8 percent to 460 million tonnes this year, implying it has to cut output by more than 10 percent in the remaining months of 2009.
Global miners are depending on China to make up for losses elsewhere as steel production crumbled in the wake of a deep economic slowdown since late last year.
For graphics on China's iron ore imports: here (Reporting by Miyoung Kim; Editing by Jonathan Hopfner)
http://www.reuters.com/article/marketsNews/idUSSEO18139420090602
Chinalco holds fire on refinery plan
Mathew Murphy
June 2, 2009
STATE-OWNED Chinalco will wait until federal Treasurer Wayne Swan makes a decision on its $US19.5 billion ($A24.4 billion) deal with Rio Tinto before it decides on the miner's Yarwun alumina refinery in Queensland.
Rio has again agreed to extend the original March deadline amid mounting pressure for governments to break the monopoly control the Rio-Chinalco alliance would have over Queensland's world-class bauxite leases.
"Chinalco now has until June 15 to confirm its participation in the funding," Rio said in a statement. "The expansion project is now 29 per cent complete."
In late 2006, the Queensland Government controversially awarded Chinalco's 30 per cent owned Hong Kong subsidiary, Chalco, the right to develop the 650 million tonne Aurukun bauxite deposit. The Government had stripped the leases from Alcan, now owned by Rio, after it failed to move the project forward in 28 years.
Chalco gave an undertaking to build a multibillion-dollar refinery in Bowen in a deal expected to create about 600 permanent jobs.
But with the sharp downturn in alumina prices, Chalco has told Queensland Premier Anna Bligh the refinery may be shelved. A feasibility study on a refinery is due by September.
Chalco's alternative is to provide funding for the $US1.8 billion ($A2.2 billion) second-stage development of Rio's Yarwun refinery. Chinalco would secure a 50 per cent share of Yarwun from Rio for $US500 million in the $US19.5 billion tie-up.
Queensland has urged Chalco to take a long-term investment view in the state. The tie-up between Chinalco and Rio could mean a loss of billions of dollars for the Queensland and Australian economies.
The decision to extend the deadline seems to indicate that Mr Swan would make any tie-up with Rio conditional on the bauxite leases.
Industry sources suggest that the two governments want the Rio-Chinalco alliance to surrender about a third of the bauxite leases to ensure competition and to maximise Queensland's position as a supplier. It would also allow for appropriate investment in downstream processing if Rio-Chinalco wants to export huge amounts of bauxite to China for processing.
■ The Australian Shareholders Association says Rio's proposed deal with Chinalco is "inequitable" to shareholders and may give the Chinese company undue influence.
With BLOOMBERG
http://business.theage.com.au/business/chinalco-holds-fire-on-refinery-plan-20090601-bt1x.html
Associated Press
Uranium mining firm asks for appeals court review
By HEATHER CLARK , 06.01.09, 01:10 PM EDT
A Dallas-area uranium mining company said Monday it will ask a federal appeals court to review an April decision that a proposed uranium mine site in western New Mexico is on American Indian land.
Lewisville, Texas-based Uranium Resource Inc. says in a news release it will ask the 10th U.S. Circuit Court of Appeals in Denver for an "en banc review" of the decision that sided with the Environmental Protection Agency.
Such a review would bring the case before the entire 10th Circuit Court.
A three-judge panel denied a petition from URI subsidiary Hydro Resources Inc., which challenged an EPA ruling that the site near Church Rock where it hoped to develop uranium mines was on Indian Country.
The ruling makes it harder for Hydro Resources to get the necessary groundwater injection permits.
Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed
http://www.forbes.com/feeds/ap/2009/06/01/ap6489458.html
BHP May Need to Spend $10 Billion on Potash Mine, Goldman Says
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By Rebecca Keenan
June 2 (Bloomberg) -- BHP Billiton Ltd., the world’s largest mining company, may need to spend $10 billion to develop its Jansen potash project in Canada, Goldman Sachs JBWere Pty said.
Once completed, the mine may be able to supply as much as 8 million metric tons annually, equivalent to about 15 percent of global sales, Goldman analysts led by Neil Goodwill said in a report dated yesterday.
Demand for potash, used mostly in fertilizer, may increase as population growth forces the world’s farmers to grow more food more efficiently to save space, Goodwill said. At current prices, the global potash market is worth $28 billion, he said.
“Growth has been around 3 percent per annum with India and China having the potential for significantly increasing this growth trend,” Goodwill said. “We would expect BHP to look to acquire if the conditions are right in order to accelerate its potash position and reduce the marketing risk.”
BHP rose 2.7 percent to A$36.70 on the Australian stock exchange at 2:15 p.m. Sydney time.
Construction may begin at Jansen in July 2011, with first production in January 2015, BHP said in a document lodged with the Saskatchewan Ministry of Environment in November. It may take 10 years to reach capacity, the company said.
Chief Executive Officer Marius Kloppers said in February that BHP’s expansion preference in potash would be through the purchase of producing mines rather than undeveloped deposits.
To contact the reporter on this story: Rebecca Keenan in Melbourne atrkeenan5@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601081&sid=arJKl078vu.8&refer=australia
Fire kills at least 36 at old S.Africa gold mine
Mon Jun 1, 2009 12:57pm EDT
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* Harmony says too dangerous to search for more bodies
* Hundreds of illegal miners arrested
* Government says crime difficult to combat
(Adds government comment)
By James Macharia
JOHANNESBURG, June 1 (Reuters) - At least 36 illegal miners have been killed in an underground fire at a disused gold mine in South Africa and it is too dangerous to search for more bodies, Harmony Gold Mining Co. (HARJ.J) said on Monday.
Harmony, the world's No. 5 gold producer, said the illegal miners died at the weekend at its Eland shaft, in the central Free State province, where a similar fire at its marginal St. Helena mine killed 23 illegal miners in 2007.
Illegal mining often goes unnoticed because miners can sneak past security at one mine and exit from one owned by a different company kilometres away. Gold prices near record highs have made the risk even more worthwhile.
Harmony said illegal miners had brought the bodies of 36 others to the surface at the weekend, but that it was too dangerous to send its own employees on underground searches.
It said another 294 illegal miners had been arrested in the province in the past two weeks and would be prosecuted. That followed the arrest of 114 in March -- including 19 Harmony employees.
Harmony, the third biggest gold producer in Africa, was built on a strategy of buying old, unwanted gold shafts and mines, making it particularly exposed to plundering by illegal miners.
"It is difficult to deal with illegal miners. We don't have the capacity to inspect disused mines and in any case illegal miners are always armed," Thabo Gazi, who heads the mine safety council at the Department of Mining, said.
South Africa's Chamber of Mines said illegal mining was a problem that individual companies were dealing with, but it had no figures on the value of gold stolen. South Africa is the world's third biggest gold producer.
CATCHING THIEVES HARD
Minister of Mining Susan Shabangu expressed condolences for the deaths at the Harmony mine.
"The South African Government will not condone illicit mining, but these are human lives that have been lost," she said. "Children have been orphaned and women have been widowed."
Tom Smith, who heads Harmony's operations in the southern part of the country, said illegal miners included South Africans and illegal immigrants from neighbouring Zimbabwe and Mozambique, belonging to organised syndicates.
Some were former miners employed by mining firms, and targeted remnants of gold-rich ore in disused mines, which they dig out with shovels and at times use explosives, he said.
Catching thieves was difficult in the labyrinth of mines.
"These are very well organised syndicates, the people who died at Eland are at the bottom of the chain. You can call them the foot soldiers who do the dirty job," Smith said.
"You can easily walk underground for over 35 km (22 miles) in the Free State mines. The illegal miners can stay underground for as long as three months at a time," he said.
He said some closed shafts were left open to pump water to other shafts because the mines are inter-linked.
Even though Harmony provided security for closed shafts, some guards are bribed by the illegal miners, he said.
"They bribe security to get into the mines, and while in there can make arrangements to be supplied with food, for which they can pay a huge premium," Smith said.
Joanne Jones, a spokeswoman at AngloGold Ashanti (ANGJ.J), the world's No. 3 gold producer, said it had no illegal miners at its operations because it mostly had newer mines.
"We don't have disused mines, so we don't experience this kind of issue," Jones said.
(Editing by Matthew Tostevin and Peter Blackburn)
http://www.reuters.com/article/latestCrisis/idUSL1734672
Native Title Tribunal rejects first mine application
By Babs McHugh
Posted 1 hour 36 minutes ago
• Map: Perth 6000
For the first time in its 15 year history, the Native Title Tribunal has knocked back an application for a mining lease on Aboriginal land in Western Australia.
The Tribunal ruled the significance of a proposed mine site to a local Aboriginal group, the Martu, overruled the economic and public interest.
Many mining companies are struggling against the poor economic tide, so could the ruling have long term ramifications for foreign investment?
It is the second historic win for The Western Desert Martu People.
In 2002 they were awarded the largest ever native title determination when 136,000 square kilometres of WA's resources rich Pilbara in the north was ceded to them.
Now Reward Minerals Ltd has been denied a lease over a a potash deposit at Lake Disappointment in WA's east Pilbara.
The mine would have created 60 permanent jobs and generated $500 million a year in state royalties.
Native title lawyer Ben Zillmann says it is unlikely foreign companies will be deterred from investing in Australian mines despite the ruling
"Now they may not be as familiar with the concept of Native Title are the companies based in Australia and they'll need a little bit of education around it," he said.
"But I think it would probably be putting it a bit too strong to say that this case signals a massive ringing of alarm bells that Australia's a risky environment to negotiate in, or try to get a mining project up."
Acting CEO of the Western Desert Land Council Tony Wright says he understands the Martu could make a lot of money from the mine but that is not enough.
"It's not all about money," he said. "It's not culture for sale."
You can hear that story and longer versions of interviews with Ben Zillmann and Tony Wright at www.abc.net.au/rural follow links to mining stories.
http://www.abc.net.au/news/stories/2009/06/02/2587235.htm?section=business
Other News
SC refuses to stay land acquisition process for Ambani SEZ
Press Trust of India / New Delhi June 2, 2009, 12:36 IST
The Supreme Court today refused to stay the land acquisition process relating to the Mukesh Ambani-promoted Mumbai Special Economic Zone in Raigad district of Maharashtra.
The Mumbai SEZ had sought the stay on the grounds that if the acquisition is not completed by June 8, the entire process will lapse under the Land Acquisition Act, 1894.
A Bench headed by Justice Markandey Katju, while adjourning the matter till June 5, gave liberty to the Ministry of Commerce and Industry, Maharashtra Government and others to file replies in the meantime.
Earlier the Bombay High Court had asked the SEZ to move the Supreme Court for direction to the Maharashtra Government on expediting land acquisition.
The Vacation Bench of Justices Anand Nirgude and Rajesh Ketkar granted the SEZ the liberty to move the apex court for direction as public interest petitions pertaining to the SEZ are pending before the Supreme Court.
The SEZ had moved the High Court seeking direction to the state government for a speedy completion of land acquisition by the district administration for its SEZ coming up in Raigad district. It pleaded that two years after the state government issued a declaration of "intention to acquire the land" for the company, the final award had not been made.
http://www.business-standard.com/india/news/sc-refuses-to-stay-land-acquisition-process-for-ambanisez/63468/on
Special Economic Zones:
Socio-economic Implications
http://epw.in/epw/uploads/articles/13516.pdf
Naresh Kumar Sharma
This report of a conference held at the Indian Institute of Advanced Study on special economic zones raises doubts about their desirability on different counts. It is centred around three themes: (1) SEZs and economic development; (2) SEZs and distributive implications; and
(3) SEZs and the legal issues.
A large number of special economic
zones (SEZs) have come into exist-
ence in the last two-three years. Many of them occupy hundreds of acres of land each and often the land is acquired by the government from unwilling farmers. The SEZs are extremely attractive to exporters,
industrialists and entrepreneurs because of differential application of laws and favourable tax concessions. There is a possibility of an avalanche of SEZs to appear in the country in the future, Consequently, it is important to analyse the economic and social implications of such a large number of SEZs appearing on the scene. Among these, particularly important
are the implications for food security,
political stability of the country and the functioning of the democratic institutions.
In this context, a conference which was held in the Indian Institute of Advanced
Study, Shimla, with the collaboration
of Indian Academy of Social Sciences,
Allahabad on “Special Economic Zones: Economic and Social Perspective”, during 18-20 September 2008, conceptualised
around three main themes: (1) SEZs and economic development; (2) SEZs and distributive
implications; and (3) SEZs and the legal issues. The conference covered issues such as: land acquisition for SEZs under eminent domain power; principles for determining compensation for acquisition
of land; rehabilitation policy; compatibility
of the policy of land acquisition for SEZs with the core values of the Indian Constitution; impact of displacement on the way of life of the displaced people; the relative sizes of decrease of employment because of displacement of the people (and activities) on the one hand, and increase
in employment because of establishment
of SEZs on the other; the questions
of governance
posed by SEZs; and incompatibility of SEZs with democracy
– both at the local and at a broader level. These were based on economic theory;
results of empirical research including case studies; and studies analysing the people’s responses, in particular,
agitations
on the land question with respect
to SEZs. The wider issues relating
to the desirability or otherwise of the modern or western kind of development for India were also discussed.
In the remaining part of this article, we take a look at the main issues that emerged regarding SEZs. Due to constraints of space, this article is not able to discuss all the articles presented at the conference.
Objectives of SEZsThe kinds of special provisions and concessions
now given legal sanction through enactment of the Special Economic Zones Act, 2005 (Act 28 of 2005) were earlier justified for export promotion. The preamble
to the SEZ Act, 2005 says that
this is[a]n Act to provide for the establishment, development
and management of the Special Economic Zones for the promotion of exports
and for matters connected therewith or incidental thereto
The objectives of the Act and hence its promise and rationale are captured in
the Guidelines provided in Section 5 of the Act:
5. (1) The Central Government, while notifying
any area as a Special Economic Zone or an additional area to be included in the Special Economic Zone and discharging its functions under this Act, shall be guided by the following, namely: (a) generation of additional economic activity;
(b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (c) creation
of employment opportunities;
(d) development
of infrastructure facilities; and
(e) maintenance of sovereignty and integrity of India, the security of the State and friendly relations
with foreign States.
It is obvious that the SEZs are being justified
not in terms of exports expansion alone, but as an engine of growth and employment generation. Emphasis is laid on infrastructure. Thus, Alok Sheel in his study on some debatable issues of SEZ asserts
that a policy encouraging investment
in infrastructure and modern manufacturing
(crucial for economic development)
needs to be supported, yet, he warns that, “use of tax incentives as a proxy for tweaking the policy environment
is fraught with long-term hazards”.
commentary
Economic & Political Weekly EPW may 16, 2009 vol xliv no 20
19
Though the first export processing zone (EPZ) was established in India 40 years ago – these were slow to multiply – the hectic, almost feverish, expansion
of SEZs has started taking place only
after passing of the SEZ Act, 2005 and framing of the SEZ Rules, 2006. Sheel points out that 95% of investment, over 60% of employment and dramatic spurt in exports in SEZs have taken place only after February 2006.
Partha Mukhopadhyay shows that most of SEZs, post-2005, are tiny and are connected
with information technology and information technology-enabled services (IT/ITES). They dominate in numbers, but occupy a small share in the area under SEZs, and yet, provide bulk of employment
in SEZs. These SEZs are generally close to already existing urban centres – the greatest
concentration of SEZs is
along three to four select corridors near Delhi, Mumbai, Hyderabad, etc. Special economic zones have not helped spread industrial or service sector activities
to the remote areas or rural hinterlands.
Sivaramakrishnan, reflecting on enclave approach inherent in SEZ policy says, “factories
and office buildings can be gated
with control access and exit but communities cannot be”. India created numerous new (industrial) towns which were beset with this problem, unresolved to date, yet SEZs go back to the same concept of a privately built and managed company township!
Manufacturing, Technology
and ExportsAradhana Aggarwal finds that the SEZs helped India in exporting certain new products. However, these could not induce technology-based dynamism. Though appreciative
of possibilities opened up by SEZs, she finds that the “overall impact... can at best be termed ‘moderate’”. Since, the concurrent changes in terms of exports
or technology or employment in the rest of economy were not part of the study, it is a moot point whether the net effect of SEZs on the economy as a whole would be even moderately positive.
In the light of early fascination with China’s “success” in this regard, it was shown that this kind of policy has led to a whole host of adverse and unintended consequences (Shrivastava) in terms of increased
inequalities across the income classes, worsening geographical imbalances
and social security system, and adverse
impact on agriculture. Given a very different political system, China was, however, able to isolate its SEZs from the rest of economy, and could even exercise control over the kind of economic activities
it wished to encourage in the SEZs. As China is no more regarded as a role model, penetrating studies of SEZs in China
and other economies will yield valuable
insights.
Land and Natural ResourcesThe most widely discussed issue in the conference was that of land acquisition for SEZs – mostly from farmers. Studies from the field, where agitations have taken place/are going on and studies of so-called “model SEZ policy” in terms of amicable transfer of land were presented in the conference
(papers by Patankar, Sunil, Panda and Asher). The setting up of SEZs has often been opposed by the farmers whose land is being acquired as also by the local people. It was claimed that the farmers are neither adequately compensated
nor properly rehabilitated. It was argued
that the nature of the SEZ model of industrialisation destroys more jobs than it creates. Similar past projects have been the sagas of unfulfilled promises of compensation, rehabilitation and jobs (Kumar).
A number of the displaced persons
have been reduced to street begging
in cities, and at best, only a few have got low skill, low grade jobs, such as that of a chowkidar.
Patankar presented his study of struggle
of people in Alibag (Raigad district, Maharashtra)
over the last two years. He argues that the scale of planned power projects substantially exceeds the energy needs of the entire state of Maharashtra in the near future, and further that these projects will spell an ecological disaster. The paper proposes
an alternative energy strategy, which does not involve the mega projects as hitherto planned for the Konkan region.
Asher, in her field study from Gujarat, narrated four case stories, and examined the so-called successful Gujarat model of SEZ. Problems related to acquisition of land for SEZs are found to be not very different (some of the largest SEZs are in Gujarat, the state accounting for the largest land area under SEZs). The image of “peaceful” establishment of SEZs has been possible due to the silence of the political class across the board, including the opposition. Some of the adversely affected communities
are nomadic tribes without formal ownership of land, though dependent on land resources for their livelihoods. They are not even aware of the uncertain future in store for them. In a startling case story, she reveals that a private company, as if exercising the power of eminent domain,
actually issued a “land acquisition notice” to a panchayat.
The SEZ policy is seen as a part of a larger objective of grabbing control of natural resources.
The issue of water resources was seen to be of particular importance. From which sources would huge water needs of many SEZs be met? It is feared that water will become more and more a marketed commodity, with diminishing control of ordinary people over it. Water being vital for human survival, water wars are likely to result. Land grab and water grab could seriously jeopardise food security.
Some representatives of the people resisting the proposed land acquisition for SEZ in Una district in Himachal Pradesh came to the conference and presented the relevant facts and their case against the proposed SEZ.
Incentives and
Macroeconomic ImplicationsA strange phenomenon is being witnessed in India in recent times. Instead of the firms competing with each other, as suggested in economic theory, the states are competing
with each other in a sort of rush to the bottom by promising cheap land, tax incentives
and other facilities to attract companies to set up SEZs. The prospects of revenue loss are alarming. It is going to severely constrain the state governments in their expenditure, especially on public programmes, and adversely affect
the poor in particular (Kumar) – in the light of the Fiscal Responsibility
and Budget Management (FRBM) Act. The incentives given to SEZs could adversely impact the rest of the economy, and the net investment is likely to remain low. Low employment intensity in the capital-intensive activities
commentary
may 16, 2009 vol xliv no 20 EPW Economic & P 20 olitical Weekly
in SEZs implies an adverse impact on the aggregate employment.
How have the states with or without SEZs fared? Rohit Prasad provides some preliminary answers. A statistical comparison
of these two types of states on several
economic parameters shows that “the main difference between SEZ states and non-SEZ states is the scale of operation of SEZ states”. The SEZ states show significantly
higher total production, state
domestic product (SDP), as well as higher levels of agricultural and industrial production.
But these differences disappeared when it was analysed in per capita terms. The only variable which distinguishes them apart is the share of export income as a percentage of respective SDP. He also finds that there is no significant impact of SEZs either
in boosting infrastructure, manufacturing and agriculture, or, in fostering
balanced regional development or in giving
a boost to low skill employment.
Theoretical AnalysisTheoretically, the problem of SEZs could be argued at two levels – one at purely logical level, and two, at the level of dominant economic theory. It is shown that SEZ policy fails to pass the muster in either criterion (Naresh Kumar Sharma). Logically,
we end up in a contradiction: the SEZs either boost economic activity or they do not. If they do not, there is no case for SEZs. And even if they do boost economic activity, still there is no case for SEZs – why a policy beneficial for an enclave would not do greater good when applied to the entire economy.
Economic theory does suggest that profitability
at every level of production is improved,
if costs are uniformly reduced. Assuming
there are no drastic changes in demand, it can be shown that production would increase. However, this theoretical result applies to an SEZ taken by itself, i e, under the assumption that nothing else changed in the world. However, at least two qualifications must be considered on theoretical grounds. One, there are distributional
consequences. Even if there is an increase in the overall production, it does not imply that there is an increase in the production across the board. Everyone may not gain to the same extent, some may even lose. Two, the overall performance can be judged by considering only the
net effect on production, exports, income creation, etc, for the economy as a whole. With differential economic environments inside and outside the SEZs, productions inside the SEZs and in the rest of the
economy both are affected. Net change
in production for the whole of economy
is difficult to predict a priori. Theory
suggests that distortionary tax/incentive structures generally reduce overall output.
There is yet another issue to be considered
on theoretical grounds alone. With differential economic environment created
in the same larger economy, there are obvious gains to be made from moving into the preferred zone, the SEZ. These gains, theory suggests, will be wiped out for producers through rent-seeking behaviour
of the developers.
Law and EconomicsThe issue of acquisition of land by state for the purpose of establishing SEZs was the focus of study from a theoretical perspective
of law and economics (Hazra, Jain, Mahanta and Pal). Pal discussed the principles of compensation in some detail
commentary
Economic & Political Weekly EPW may 16, 2009 vol xliv no 20 21
and explained how the problem of holdout
may arise. The problem of acquisition of land by state for SEZ was put to rigorous
theoretical analysis by Jain. He derives
the conditions for avoiding the misuse
of power of eminent domain (ED) and also the conditions conducive for wealth creation. It is shown that the condition
in both cases turns out to be identical: compensation must not be less than the subjective valuation of the land by the landholder. Note that if this condition is satisfied, the land can as well be acquired through market mechanism. Case for
use of power of eminent domain arises when there is a holdout problem, which is unlikely to be the case with SEZs.
Further, frequent use of this power is likely to be social wealth reducing. Thus, the use of power of eminent
domain by the state must be subjected to “public purpose” as its justification. Public purpose
becomes an ineffective criterion, if it is too broadly defined. It is shown that private entity, regardless of its character, can never justifiably claim to be serving a public purpose. Hence, there is no case for acquisition of land by the state for the purpose of SEZs at a compensation which is below subjective valuation of land by their owners.
ED power can be useful in the presence of “transaction costs” and for redistributive
purpose. Evidently, since farmers have shown their unwillingness to give up their land at the compensation offered,
the whole exercise entails a redistribution
from a multitude of marginal farmers to the entrepreneurs developing SEZs (also Mahanta). The proponents of the SEZs are also great adherents of
the market mechanism (for its alleged economic efficiency). They oppose any kind of subsidies even to the poor, instead, favouring direct payments. By the same token, it will be appropriate that the
government, rather than subsidising them through cheaply acquired land,
executes direct payments to SEZ developers.
Besides serving the ends of achieving economic efficiency, it will
also be a transparent mechanism to show the SEZs for what they really are – a mechanism
of redistribution from the less
well-off (landowners) to the far more well-off (entrepreneurs
– SEZ developers),
at least in terms of the acquisition of land for SEZs.
That the SEZ developers can acquire land through market process and that it entails economically superior outcomes (since based on voluntary trade) was demonstrated in their respective papers by Hazra and Mahanta. The bargaining process will lead to an optimum (and market) outcome, in which the last seller might demand the whole of rent available in the SEZ (Mahanta). But how the rent between
the last seller and the developer is divided is immaterial for creation of social wealth and is purely a redistributional problem between two private parties. Hazra, on the other hand, cites the bargaining
process involved in acquisition of a company by another company by acquiring
shares from highly dispersed and numerous
investors.
The same process can be used to resolve the holdout problem in land acquisition.
He also draws attention to the distinction between criterion of “public good” and “public purpose” and how the latter can be open to abuse through a wide meaning being given to it.
Democracy and ConstitutionAttention was drawn by several scholars to the undermining of democratic institutions
in creation of SEZs under the SEZ Act 2005 (particularly, Jain, Kumar and Sivaramakrishnan).
It was demonstrated how setting up of SEZs is contrary to the basic character of Indian Constitution. There is a provision for not having any democratically
elected bodies of local governance in the SEZs. The question was raised: are the SEZs beyond the pale of Constitution? Sivaramakrishnan
quotes from the Sixth Report of the Second Administrative Reforms
Commission: ...no islands can exist within the country outside the jurisdiction of constitutionally elected governments. Therefore, a SEZ must be in conformity with the laws and rules relating
to local governments. … The Commission
is of the view that local bodies should have full jurisdiction with regard to enforcement
of local civic laws in the SEZs
And yet, there are illustrations of the local
municipal bodies being kept out where the SEZs are concerned. For example, in spite of there being over 10 SEZs
in the vicinity of Greater Mumbai Metropolitan
Planning area, ... no reference has been made to the Mumbai Metropolitan Region Development Authority.
Jain pointed to contradictions between basic tenets of a democratic society and SEZs and further suggested that provisions of SEZ Act run counter to the basic character
of Indian Constitution. First, it has been alluded earlier that the SEZs are
basically instruments of redistribution of wealth from numerous poor – mostly marginal and small farmers to the private
entrepreneurs. SEZs are, thus, putting thousands and in due course millions
of livelihoods at peril. This act of depriving them of their means of livelihood
violates the fundamental right to life and liberty granted to every citizen by the Constitution. Second, by enacting different sets of laws for SEZs and the
rest of the country, it could be violative
of the fundamental right of equality.
Jain also puts related and disturbing question: what would such a dual system do to the political stability of India as a democratic society?
Concluding RemarksThe presentations at the conference and subsequent discussions raised serious doubts over desirability of SEZs from various
aspects. Prima facie, SEZs can lead to some serious consequences. Struggles on the land issue are already surfacing in different
parts of the country. These are also struggles for right to livelihood of one’s choice based on one’s values and vidya (knowledge). The local responses to these may vary from place to place – the process of acquisition of land and setting up of SEZs could, for example, be peaceful in some cases. But more often than not conflicts
have emerged. There are theoretical grounds and empirical evidence to suggest
that at the worst the SEZ policy can lead to serious and adverse consequences including social conflict, civil strife and breakdown of democratic institutions. It is also likely to lead to increased inequalities,
and possibly shrinking of economic space for the ordinary people by making their production more unremunerative. Thus, the least we need is a thorough study of this phenomena and a vigorous debate. These tasks are becoming urgent as a large number of SEZs are being approved,
notified and set up.
http://epw.in/epw/uploads/articles/13516.pdf
UN indigenous forum calls for consultations on patents
A participant at the 7th session of the UN Permanent Forum on Indigenous Issues (file photo)
29 May 2009 – A United Nations conference on indigenous affairs wrapped up its two-week gathering today, making a host of recommendations, including the worldwide establishment of a mechanism requiring patent offices to publicize the origins of products derived from indigenous knowledge when exclusive rights to the design are requested.
The Eighth Session of the UN Permanent Forum on Indigenous Issues also called on States and corporations to involve indigenous people in all negotiations relating to the entry of mining industries, infrastructure projects and other development schemes into their communities.
One of the texts approved by the Forum, a subsidiary of the UN Economic and Social Council (ECOSOC), called on the international community to ensure the application of culturally relevant, gender-balanced and gender-based analysis and gender budgeting as critical elements of economic and social development, consistent with the UN Declaration on the Rights of Indigenous Peoples.
The Declaration, a landmark text adopted in 2007, outlines the rights of the world’s estimated 370 million indigenous people and outlaws discrimination against them. It sets out rights to culture, identity, language, employment, health, education and other issues.
The 16-member Forum – which drew around 2,000 indigenous representatives from all regions of the world, as well as representatives of Member States, civil society, academia, some 35 UN entities and other intergovernmental organizations – approved a provisional agenda for next year, including a half-day discussion on North America.
http://www.un.org/apps/news/story.asp?NewsID=30973&Cr=indigenous&Cr1=
Sanctuaries can save 90 p.c. bird species as climate changes
London (IANS): A network of wildlife conservation areas can help save up to 90 percent of bird species in Africa, affected by climate change, according to scientists.
The research team, led by Durham University (DU) and including BirdLife International looked at the effects of climate change on 815 bird species of conservation concern in sub-Saharan Africa.
The study demonstrates that a network of wildlife areas will be a crucial tool to help biodiversity survive future climate change. The findings suggest an urgent need for legislators to protect ecosystems and key wildlife areas in Africa.
They show that, over the next 75 years, the biodiversity of some regions will suffer more than others as a result of climate change. They also underline the importance of providing 'green corridors' to help wildlife move to find new climatically-suitable areas.
The team led by Stephen Willis and David Hole from the School of Biological and
Biomedical Sciences, Durham University, used simulation models to see how climate change might affect birds in important bird areas (IBA), in the coming decades.
Researchers looked at a network of 863 IBA sites across 42 countries and territories
covering around 2,079,306 square km (1.3 million sq miles) or seven percent of the African landmass.
The sites are identified as being critical for the conservation of birds, in particular, species that are globally threatened, restricted in range or restricted to particular biomes. Together, African IBAs are home to 875 of these species, said a DU release.
"Important Bird Areas will provide new habitats for birds that are forced to move as
temperatures and rainfall change and food sources become scarce in the areas where they currently occur. Protected areas are a vital conservation tool to help birds adapt to climate change in the 21st century," said Wills.
The study was published in the journal Ecology Letters.
http://www.hindu.com/thehindu/holnus/008200906021340.htm
Kofi Annan: 300,000 people die every year from climate change. Nonsense.
Posted By: James Delingpole at Jun 1, 2009 at 17:47:35 [General]
Posted in: Politics , Society
Tags:
climate change alarmism, Kofi Annan
"Three hundred thousand people are already dying every year as a result of global warming, according to the most comprehensive report ever on the human impact of climate change," it was reported last week. The claim was made by a think tank called the Global Humanitarian Forum set up by the extravagantly-besuited ex-UN chief Kofi Annan.
You knew it was a nonsense. I knew it was a nonsense. But what we needed was an expert to come along and explain in proper scientific terminology exactly why it was a ludicrous farrrago of unmitigated tosh and drivel. And now one has. Step forward Roger Pielke Jr, a political scientist at the University of Colorado, Boulder who specialises in precisely the area covered by the report: disaster trends. (Hat tip:Climate Depot)
Pielke was in no mood for taking prisoners. The Global Humanitarian Forum's report, he says, is "a methodological embarrassment and poster child of how to lie with statistics." And he adds:
"The report is worse than fiction, it is a lie."
Pielke goes on to explain why. The GHF report was based on analysis done by a group - Geo Risks of Munich Re - he had worked with earlier this year at an international workshop of climate change and natural catastrophe losses. At this workship it was concluded that:
"Due to data-quality issues, the stochastic nature of extreme event impacts, the lengths of the time series, and various societal factors present in the disaster loss records, it is still not possible to determine what portion of the increase in damage may be due to climate changes caused by GHG emissions."
and
"The quantitative link (attribution) between storm/flood loss trends and GHG-induced climate changes is unlikely to be determined unequivocally in the near future."
In other words, all the world's experts in the field (including the report's authors) concluded that there is, as yet, no quantifiable correlation between "global warming" and natural disasters. Indeed, they believe there is probably no connection whatsoever.
The report, he says, is based on a "very strange" comparison of earthquake and weather disasters in 1980 and 2005. "The first question that comes to mind is: why?"
"An alternative, more scientifically robust approach would be to look specifically at weather-related disasters, and consider the role of socio-economic changes, and to the extent possible, try to remove that signal and see what trends remain. When that has been done, in every case (US floods, hurricanes, Australia, India TCs, Latin America and elsewhere, all in the peer-reviewed literature) there is not a remaining signal of increasing disasters. In other words, the increase in disasters observed worldwide can be entirely attributed to socio-economic changes. This is what has been extensively documented in the peer reviewed literature, and yet — none of this literature is cited in this report. None of it! Instead they rely on this cooked up comparison between earthquakes and weather related disasters"
"(Consider also that in no continental location has there been an observed increase in tropical cyclone landfalls, and yet this accounts for almost all of the windstorm disasters cited in the report. The increase must therefore be due to factors other than geophysical changes. This fact renders the comparison with earthquakes even more meaningless)."
The reason more people are dying or being economically affected by weather disasters, in other words, is the pretty bleeding obvious one that people are living in greater numbers in potential disaster areas - be they the sides of active volcanoes, on earthquake faultlines or in Tsunami and flooding zones.
But, hey, was it not ever thus with the climate change lobby: never let the facts get in the way of a good scare story?
http://blogs.telegraph.co.uk/james_delingpole/blog/2009/06/01/kofi_annan_300000_people_die_every_year_from_climate_change_nonsense
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