The National Assembly yesterday added a new Section in the Mines and Minerals Bill 2020, which states that the state shall ensure broad-based ownership in mining operations by requiring 49 percent of shareholding to be floated to the public.
The existing mining law requires the mining promoters to float 30 percent of the total shareholding of the company.
Proposing the new Section, chairman of the economic and finance committee Kinley Wangchuk said that it would ensure mining resources benefit the maximum people. He said that mining resources are being enjoyed by a handful of people.
The new Section, he said, would enable small investors invest in the mining sector.
Panbang MP Dorji Wangdi said that there are 26 mining companies and 40 stone quarries in the country. He said that keeping 40 percent shares to the public was in line with distributing the mining wealth to maximum people in the country.
The committee had proposed at least five prompters in a mining company. However, members said that having more promoters would increase the chances of corruption and the House rejected the committee’s proposal.
The House also decided that all mineral reserve proven by the geology and mines department shall be allocated through public notifications through open competitive bidding process or to a state owned enterprises.
Panbang MP Dorji Wangdi said that there was no need for the government to invite bids if a mining work is given to a state-owned enterprise (SOE). “The government can directly allocate the work to a SOE,” he said.
The National Assembly also decided to increase the lease period from 15 years to 20 years. The Bill had proposed to increase to 30 years.
“Those mines whose lease period is 15 years will get additional five years and others that have 10 years lease period will have 10 more years,” the committee chairperson, Kinley Wangchuk said.
The House decided that the mining shall be leased through open auction for the expected economic life of the mine or for a maximum period of 20 years, whichever is less. The Bill has no provision for renewing the lease, which means that once the lease period expires the mining will be leased through open auction.
According to the Bill, the leasee should start mining operation within the period specified and carry out mining operations in accordance with the Mine Plan, Environmental and Social Risk Management and Mitigation Plan and the lease agreement.
Communities affected by mining operations say that they have little to benefit from mining in their localities, while the impacts threaten their livelihood and health.
But miners says that the corporate social responsibility carried out by the company had directly benefited the community and shareholders benefited from returns on their investments.
Some officials say that there weren’t many operators due to the capital-intensive nature of the business and that the country was benefiting in the form of taxes.
The Parliament is hoping to make sure that the Bill would enable the mining sector to create thousands of jobs and ease the business operation in the mining sector.
The Mines and Minerals Management Act 1995 has never been amended although several changes and related issues have emerged in the last 24 years.
Minerals are among the top 10 exports of the country. Seven mine-based industries (MBIs) in the country paid a total of Nu 455.8 million (M) in 2017 and Nu 601.2M in 2018 as Corporate Income Tax (CIT), according to reports available with the committee.
The net profit earned by the seven MBIs was Nu 1.1 billion (B) in 2017 and Nu 1.3B in 2018. According to the reports, the total royalty and mineral rents levied was less due to the application of incentivised royalty system.