Mines and Mineral Act to decide nationalisation of resources

PM says nationalisation process has begun

Rinzin Wangchuk

The government cannot decide on the nationalisation of mineral resources in the country without the Mines and Mineral Bill being passed as an Act, according to Prime Minister Dr Lotay Tshering.

Following the recent decision to hand over the Chunaikhola dolomite mine in Samtse to Sate Mining Corporation Ltd. (SMCL) after cancelling a scheduled auction, the National Council (NC) recommended nationalising mineral resources and allocate all mines to SMCL for operations. The Assembly on June 16 rejected the recommendation with only two of the 36 members present supporting the NC’s recommendation without a debate.

Justifying the government’s stand for rejecting NC’s recommendation, Lyonchhen said that for nationalisation, the weapon is the Mines and Mineral Bill, which is still not passed. “I could have easily, with one stroke of the pen, asked Druk Holdings and Investment to take over the mines. I do not have that weapon right now but that Act will give me,” he told Kuensel.

The NA had adopted the Bill 2020 during the last Parliament session and forwarded it to the Council for deliberation and adoption. “Until the amendment Act is passed by both Houses, we have to adhere with the Mines and Minerals Act (MMA) 1995 and its rules and regulations,” he said.

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

“Parliament held several debates on this, the concept itself is present there. The line – ‘State will decide’ itself is enough,” Lyonchhen said adding that if the government was not for nationalisation, the Mines and Mineral Bill would not have been passed in the Parliament.

PM defines strategic mines

One contention of the mines debate at the moment hinges on the definition of what is a strategic or non-strategic mineral. The Council recommended that all mines should be operated by the state-owned enterprises until a new Mines and Minerals Bill is enacted. But Assembly members said that the government should take over only strategic mines and leave non-strategic minerals to the private sector.

However, there is no clear definition on strategic or non-strategic minerals. Both the mineral policy and the MMA Act 1995 defines it vaguely.

The MMA Bill 2020 defines strategic minerals as those that are in short supply and essential for domestic industries, or are rare and have high values with security implications. It is at the discretion of the government to review and update the list periodically.

Lyonchhen, however, has a very clear definition of strategic mines. He said that there is no international definition for strategic or non-strategic mineral. “All minerals in Bhutan are strategic when we define them for generations to come. To me, given our size, all deposits by their size are also small. Whatever we have here is strategic.”

He said that what is non-strategic now will be strategic in the future. “It may not be strategic for now but it will be strategic for my children and grandchildren,” Lyonchhen said.

Lyonchhen said that Section 4, Article 5 of the Constitution states that Parliament may enact environmental legislation to ensure sustainable use of natural resources and maintain intergenerational equity and reaffirm the sovereign rights of the state over its own natural resources.

The mining policy adopted in 2017 has defined ‘intergeneration equity’ in terms of minerals, being exhaustible in nature, means to prescribe various measures to invest the mineral resources cautiously and in productive capacity bequeathing future generation with direct and indirect benefits.

Citing the example of dolomite, which has a deposit to last for about 200 years, Lyonchhen said that he will not live for 200 years. “But my blood will be passed down and there will be somebody with my blood who will be walking around in 200 years time,” he said.  “He has to consume it. I don’t want him to blame me for running out of dolomite.”

Going by generational definition it is a highly precious mineral that’s why all minerals are strategic, Lyonchhen said.  “At the same time, people need to consume it now as well. So when it is like this, there is no mineral that is non-strategic for Bhutan.”

On Chunaikhola dolomite

The NC had commended the government for handing over the Chunaikhola dolomite mine in Samtse to the SMCL. The auction was scheduled to take place subsequent to the expiry of the present lease of the mine operated by Jigme Mining Corporation Ltd. (JMCL).

Prime Minister on June 1 wrote to the Economic Affairs Minister to discuss with SMCL to look into the operations of the mine to ensure minimum business activity and to keep the service afloat in the interim period after the present lease expires this month.

The only condition according to Lyonchhen was that there should be a smooth transition. “Jigme Mining should not be roughed out of the business as soon as possible. And so SMCL’s coming in must also be gradual and slow. SMCL must also realise that it is not for them, it is for the state,” Lyonchhen said.

Lyonchhen said that SMCL today has the guts to say that they can do a better job.  “But their basis is set by JMCL, market is explored, branding is also done. It cannot go down below what JMCL has done.”

JMCL would not be allowed to extract or excavate mines after the end of June this month. However, JMCL can sell their stocks during the six months seamless transition period.

The Prime Minister said that during this transition period, SMCL and JMCL should hold talks and whatever agreement they come up with, the government would be happy. “We have to give them a transition time. Jigme Mining has been working for 15 years,” he said.

Lyonchhen also said that SMCL has to make plans and strategies. “Taking over can be smooth and slow. More time SMCL takes in taking over, the better would be the strategy,” he said. “We need patience. The cow should be milked, not slaughtered for meat.”

JMCL, which has been given an extension until the end of June after completing15 years of mining lease period on May 14, has about 500,000MT of dolomite in stock which may last about two years given the present market situation.

The main markets for Chunaikhola dolomite are premier steel sectors in India like Bokaro Steel Plant, Durgapur Steel Plant, Tata Steel Ltd and more than 100 units of Ferro Alloys and Sponge Iron Plant. Due to intensive marketing, JMCL used to export about 2.6 million MT in a year.

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