With environment restoration bond (ERB) worth Nu 200 million lying in banks without earning an interest, representatives from the mining companies raised concerns that the deposit is only benefiting the banks.

The issue was raised on June 19 at a meeting in Thimphu between representatives from mining promoters and industries, National Environment Commission Secretariat (NECS), Department of Geology and Mines (DGM), and labour ministry.

According to the mines and minerals management regulations 2002, a lessee shall deposit an environmental bond to the government as security for mine reclamation and environmental restoration in the mine. It is to ensure that the negative impacts on the surrounding environment are minimised.

The regulation adds that if the lessee did not carry out restoration or rehabilitation activities as per approved Final Mine Feasibility Study (FMFS), a document submitted by the applicant for final approval of a mining lease during surrender, termination or expiry of the lease up to the complete satisfaction of the government, the bond with interest shall be claimed by DGM and utilised to cover the costs of restoration of the mining area affected by the mining activities.

NECS’s officiating head of environment assessment and compliance division, Tshering Dorji, said that the amount deposited through ERB is more than Nu 200 million excluding auctioned mines today. For the auctioned mines – dolomite, coal and gypsum, separate royalties are collected.

“The issue has been raised since 2004 or 2005 but the miners have raised it rigorously from 2015,” he said.

Several representatives from the mining companies said that as per the rules, the restoration amount should be deposited in an interest-bearing account.“The interest earned is huge and in our case the amount is about 20 million. The interest need not necessarily come to the company. It can be provided to the communities as part of environment restoration,” one of the representatives, Letho said.

DGM’s officiating chief mining engineer, Binesh Pradhan, said the companies were not receiving interest for the amount because the agreement is referred to as bond.

He said the public finance Act of Bhutan 2007 states that a bond agreement would not bear interest.

“The fund deposited is now in millions and the banks are benefiting from it. We have raised the issue to the ministry of finance several times but changing the account to an interest-bearing account is not possible,” he said. “Now we are planning to change ERB to environment restoration fund in the mines and minerals Act and regulations, which is in a draft.”

While the issue of ERB was reiterated at the meeting, issues of late submission of ERB plans, failure to renew the mining lease on time, and carrying proposed changes before the approval from the department were also raised.

Binesh Pradhan said that the mineral development policy was also passed in May last year, which includes new provisions on classification of minerals, and community development fund.

Today, Bhutan has 12 captive mines, 70 active mines and quarries, 13 mines under restoration, and six mines under renewal process. Mining activities cover up to 3,716 acres of land.


Phurpa Lhamo