This Ore is our ore

By Lionel Messiah in his column “Lionroars” on Sunday , 21st June 2009, Herald’s Mirror section published from Panjim, Goa.

The Dempos sold its mining company, which holds 1,800 hectares of leased mining licences to Anil Agarwal’s Vedanta Resources for a cash-and-carry sum of Rs 1,750 crore. But, hang on, does the company actually own the ore on the land they owned, not withstanding the fact no individual can own mineral rights in India? The distressing answer is huge ‘NO’. Why? Because mineral wealth is the nation’s wealth – not for individuals to exploit for their personal benefit. The US is the only country on the planet that allows individuals to own mineral rights. And we all know what those merry band of individuals, who not only own minerals, also everything above and below earth, did to the world’s economy. Through a rather cunning route, the Government of India was thwarted in its plans to nationalise the mines in Goa decades ago – the compromise was the mining leases you have in Goa today. What the Government of India did was annul the concessions given by the Portuguese for perpetuity. It then came out with The Goa, Daman and Diu Mining Concessions (Abolition and Declaration as Mining Leases) Act, 1987. So, while everyone applauded, the deal of the century (Dempo-Vedanta) was played out making maximum use of Goa’s red soil.

Surface Rights or Mineral Rights?

If you calculate the quantity of ore that has been dug out from the earth and sold to the Japanese alone, it would give you sleepless nights thinking of what the worth of that could have done for Goa. Macau would look like a poor man’s Shangri La. Here’s a bit of information that should at best (or at least) make you want to pull your hair out, so you can sleep at last. Sesa Goa’s linage has been transformed since 1954, when it kicked off as Scambi Economi SA, Goa. The following year it was jointly renamed Sesa Goa Ltd, after it was jointly taken over by Gewerkeschaft Exploration, West Germany, and Ferromin SpA, Italy, a subsidiary of Finsider SpA, belonging to the IRI group – which had by then acquired the German company’s stake in Sesa. Mingoa Pvt Ltd and Sesa Goa were merged into one company.

Later, in the course of restructuring of certain subsidiaries within the IRI group, Sesa Goa’s ownership changed from Finsider SpA to Finsider SpA International SA, Luxemburg, and then to Finsinder International UK. Phew! Looks like a soccer game, the way they kick around (on) Goa’s scarred red soil. In 1981, Finsider divested 60 per cent of its shareholding to the Indian Public. It hiked it again under its new name Ilva International, from 40 per cent to 51 per cent in 1993 – now under the RILP umbrella. Now, tell me what stops Vedanta from selling the combined might of their mines to China’s Chinalco, who were willing to offer a $19.5-billion-cash injection in favour of a joint venture in Western Australia with bitter rival BHP Billiton, just to keep out another rival, Rio Tinto? It’s a long story, but what needs to be understood here is that when rare earth gets rarer, $19.5 billion becomes peanuts. That’s why the US is willing to fight a trillion-dollar war in Iraq to gain control over crude oil that costs far, far less to refine closer to home. And may I remind you that Rs1,750 crore would mean chickens*#t, considering the low rupee value against the dollar, and no deterrent to future buyers like the Chinese going on an acquisition spree.

Jogging your memory

When I interviewed Emilio Riva – who owned RILP – 1995 for a national business daily in Sesa Ghor, it was crystal clear to me that he had no intention of retaining ownership of the Sesa Goa he had just acquired. Though he denied it in the interview, he soon sold it to Mitsui, who appeared to have the same itch to sell as all Sesa Goa owners inherently have, and sold it to Vedanta. The Italian billionaire has, at that point of time, acquire Ilva Laminati Piani SpA, Italy(ILP), the holding company of Finsider International Co Ltd, UK, which was Sesa Goa’s principal share shareholder then. The Riva Group rose from 25th position to become the world’s fourth-largest steel producer after it acquired ILP. See, its all about power, wealth and screw the rest. Incidentally, the Essar Group also had a 32 per cent stake in RILP!

PS: My apologies if the 2-Fast-2-Furious pace of describing how Sesa Goa was sold over the years made you dizzy. But within this restricted space I couldn’t do any better.