Impasse over Mining Bill

While the two parliament houses remain on a deadlock, exporters shout-out for their provisional rights over the mining sector

By Tashi Namgyal

By the look of things, the much disputed Mines and Minerals Bill 2020 will have to take a hefty ride down the tunnel to be resolved for good.

While the National Assembly (NA) favors a private-sector induced mining sector, the National Council (NC) stands firm on allocation of mines to State-Owned Enterprises (SOEs).

The joint committee on the Bill from the two Houses says that they have not been able to agree on the principles of the Bill. “The entire Mines and Minerals Bill is disputed unlike other Bills where disagreements concern only disputed clauses,” eminent member of NC Phuntsho Rapten said.

The Mines and Minerals Bill, which has been debated for quite some time in the parliament with somber atmosphere has also called for refutations from exporters around the country who are exorbitantly against the NC’s resolution.

While some members of the committee questioned if it would limit private sector’s participation in mining and raised the need to keep it open for the private sector, many pointed out that bureaucratic hassles will increase if mines were to be allotted to SOEs.

Though acknowledging the constitutional provision that all mining activities should be owned by the State, exporters around the country say that private individuals and promoters are also not barred from operating mining activities.

Citing examples of socialist countries like China and Vietnam where the economy of the country failed miserably due to the State owning all mining rights, an exporter from Samtse said that Bhutan cannot allow itself to follow in those footsteps.

Close to 750 million people were affected and only then these two countries changed their policies and privatized the mining operations. “Their economies are now thriving as everyone could see,” he said, reiterating that Bhutan with less than a million people and a small economy should not allow even a hint of wrong decision to creep in while drafting policies regarding the mining sector.

A boulder exporter from Phuentsholing said that if the mining rights are under the purview of the SOEs, promoters and exporters will take undue advantage of it and misuse it because the blame would eventually go to the government.

“In laymen’s terms, it is like people using pool vehicle. Because it is not their vehicle, people misuse it and don’t take care of it,” he said. He cautioned that SOEs will suffer from moral hazard as has been evident from events worldwide. “All negative activities emerge from government owned enterprises where there is no efficiency, transparency and a sense of moral responsibility,” he said, adding that it is the nation who is ultimately at loss.

As for their conglomerate, the Bhutan Exporters Association (BEA) has no problem so long SOEs are ready to register with them. According to the association, there are many challenges that the SOEs cannot handle without their support.

The draft Mineral Development Policy (MDP) segregates the mining sector into strategic and non-strategic mining. Those minerals which are of high value, scarce and mined for domestic consumption are classified under strategic mining. The minerals which are in abundance and whose rates are determined by market prices are classified under non-strategic mining.Only quarries that produce construction materials are operated by private companies today.

According to the BEA, when the MDP was developed earlier, it was decided that all the benefits accrued out of strategic mining can be enjoyed by the promoters based on certain obligations and conditions.

“We contributed the highest tax in 2019 which ultimately benefits the government but the same government is now trying to monopolize the entire mining sector by taking it under the banner of SOEs,” a member of BEA reiterated.

Most Members of Parliament (MP) Bhutan TODAY talked to did not believe in total nationalization of mines and stood with the NA’s resolution. They said that it was important for the government to keep non-strategic mines open to the private sector.

Although the Parliament has made efforts in such a way that the Bill will benefit the local community in terms of employment opportunities, business, education and health, experts say that the local community is not seen to be benefitting much from the mining and minerals sector under the current system.

16 sections of the Bill, which seeks to repeal the Mines and Minerals Management Act 1995, had been reassigned to the NC’s legislative committee last winter session for further review. It will be passed back to the NA after which a joint sitting will be held to finally endorse the Bill.

The background

Earlier last year, the prime minister, justifying the government’s stand for rejecting NC’s recommendation, said that for nationalisation, the weapon is the Mines and Mineral Bill, which is still not passed.

The Prime Minister also added that the government has started the nationalisation process with the passing of the Bill.

The NA had adopted the Bill in 2020 during the last Parliament session and forwarded it to the Council for deliberation and adoption.

PM had then said the parliament held several debates on this, the concept itself is present there and the line – the state will decide – itself is enough, adding that if the government was not for nationalisation, the Mines and Mineral Bill would not have been passed in the Parliament.

Following the former Opposition Leader Pema Gyamtsho’s (PhD) proposal recommending that at least one percent of the mining sector’s annual revenue should go to Bhutan For Life Fund and Bhutan Health Trust Funds, Prime Minister Dr Lotay Tshering had then supported the recommendation and proposed raising the amount to three percent each which the NA unanimously adopted.

Among others, the National Assembly adopted a new clause in the Mines and Minerals Bill 2020, which states that at least 30 percent of the employment opportunities should be provided to members of the local community.

The Bill also requires the lessee to allocate at least three percent of the shares floated to the public. In addition, the Bill also has a substantial increase in penalties for offences compared to the Act.

Finally, the Bill also specifies the responsibilities of the ministry, department and the regulating authority including the composition of the board of the authority.