Khothakpa gypsum mine lease to expire in 2018

Mining: The 15-year lease for the Khothakpa gypsum mine in Pemagatshel will expire on December 31 2018.

Druk Satair Corporation Ltd (DSCL) has been extracting gypsum from the Khothakpa gypsum mine for the last 22 years since 1994.

Although, it is not yet determined, with the on-going debate in Parliament on the state mining policy, if the Department of Geology and Mines will re-auction the Khothakpa mine, an official of DSCL, requesting anonymity, said the demarcated area still has gypsum to be mined.

Within a demarcated area of about 60.91 acres, the Khothakpa gypsum mine located in Shumar gewog has a reserve of 25.942 million tonnes of high-grade gypsum reserve with an average grade of 83 percent as per the detailed exploration done in 1968 to 1973.

Of which, the official said the company has extracted about five million metric tonnes of gypsum from 1994 to 2015 including the period prior to privatisation. India is the major market.

The first lease bid period was from 1994 to 2003 where DSCL had won the bid to mine Khothakpa gypsum for 10 years with a bid value of Nu 26.700 million.

The corporation also won the second auction in 2003 for the second lease period of 15 years from 2004 to 2018 with the bid value of Nu 413.50 million.

The bid value is paid in half yearly installments over the lease period to the government in June and December.

The official said a major chunk of its share of the total revenue generated is paid to the government and according to the audit report from 2008 to 2012, about 53.3 percent of the total revenue was paid to government.

Of the total Nu 5.9 billion of total sales revenue generated from 1994 to 2015, Nu 1.46 billion was paid to the government in terms of royalty, bid value, corporate income tax, license fees and land rent, among others.

Eleven percent of the total sales was paid to the shareholders by way of dividend from 1994 to 2015.

As per the company’s record, the corporation today has a total of 1,266 shareholders of which, 1,162 are from the eastern region. The majority of the shareholders are villagers of 11 gewogs in Pemagatshel.

“If re-auction occurs then we may or may not participate, it depends on the board members,” the official said. “Incase, if it doesn’t occur post 2018, to continue the company, Nu 45-crore project called Druk GYYP product and chemical limited is being established in Nganglam where DSCL holds 45 percent of shares.”

The official added that the factory would produce gypsum-based plaster of Paris in the first phase and then in the second phase would go for gypsum board.

The gypsum mine is often criticised for destroying land. Today, besides air pollution, many barren benches have formed along the cliff that has become an eyesore for many visitors.

The official explained benching is a scientific method in any open cast mining but the company pays Nu 10 for every tonne of material extracted as an environment restoration fund and about 15 benches have already been vegetated by planting fruit trees.

The official added they have also paid Nu 1.7 billion in the last 22 years by way of transportation cost from Pemagatshel to Samdrupjongkhar that benefit truckers, whereby the majority of truckers are from Pemagatshel.

A total of Nu 20.44 million was spent on social services in the community from 2004 to 2015.

DSCL was incorporated as a public limited company to undertake mining business in 1993 and as of date, there are seven promoters holding 35 percent of shares. The Zhung Dratshang holds 34 percent and 31 percent is held by the general public.

Yangchen C Rinzin | Pemagatshel 

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