Following the Parliament’s failure to pass the Mines and Minerals Bill 2020, the Ministry of Economic Affairs (MoEA) is revising the Mines and Minerals Management Regulations 2002 to open mining for the private sector.
Economic Affairs Minister Loknath Sharma said the new regulations are being finalised and will be launched towards the end of this month.
The current regulations state that in the case where the government decides to lease a pre-identified mineral deposit for commercial exploitation, it shall be done through public notification and a sealed or open tendering process.
The Mines and Minerals Management Act 1995 under Article 10 empowers the MoEA to lease mineral deposits to both private individuals and state-owned corporations.
“We do not want to restrict private participation in the mining sector and work will move on as soon as we launch the new regulations,” Lyonpo Loknath Sharma said on whether mines would be auctioned to the public as in the past.
Private participation in the operation of mines was suspended in June 2020, following which the State Mining Corporation Limited (SMCL) took over all gypsum, dolomite, and coal mines operated by private companies.
Officials said the arrangement was temporary for a certain period.
“All should be able to participate in the mines and minerals sector irrespective of whether they are government agencies or private enterprises,” Lyonpo Loknath said.
He said the ministry is seeking advice from the Office of Attorney General (OAG) on new regulations.
Lyonpo Loknath Sharma, however, added that the private sector should not concentrate only on coal and dolomite.
He said the mines and minerals sector, which has been identified as one of the “five jewels” of the economy, will play an important role in the recovery of the economy.
The Minister of Economic Affairs added that activities contributing “value addition” will be given preference.
Uncertainty surrounded the mining sector after the summer session of Parliament deferred the Mines and Minerals Bill indefinitely.
Some of the people in the private sector said that opening the mines to the private sector would help the economy that has been hit hard by the Covid-19 pandemic.
The GDP growth in 2020 slumped to negative 10.08 percent, which was unprecedented.
“Private companies function more effectively than state-owned companies and contribute in terms of taxes and employment generation,” a businessperson said.
There is uncertainty as to whether the government will take the mines back from SMCL and auction them to the public as prescribed by the Minerals Management Regulations 2002 and the existing Mines Act, which is not likely to be amended in the present government’s term, due to the procedure of passing a bill.
Some officials are of the view that not engaging in the auctioning of mines would be in violation of the Mines Act.
Questions also remain about the legality of the government’s decision to allocate mines to the state-owned company without following the due process prescribed in the regulations governing mines and minerals management.
The regulations state that any individual or organisation is eligible to apply for a mining lease under Article 17 of the Mines Act, which will remain in force until it is repealed by a new law.
The National Council wants operation of all mines by state-owned enterprises (SOEs), but the government and the National Assembly are in favour of allocating strategic mines to state-owned enterprises (SOEs) and leaving non-strategic ones open to the private sector.
Edited by Tashi Dema