State Mining Corporation Ltd records its first profit

After two consecutive losses, the State Mining Corporation Ltd (SMCL) has made a profit of Nu 67.39 million (M) in its third year of establishment.

It met 92.13 percent of its targets in 2017. The company’s gross revenue rose from Nu 63.52M in 2016 to 260.44M last year from the sale of coal.

SMCL declared Nu 26.84M or 11 percent of the paid up capital of Nu 23.75M.

The company’s net worth has increased from Nu 120.37M to 295.85M last year after the company procured vehicles, plant, and machinery taking its assets by 138 percent to Nu 365.35M.

Established by the government, SMCL is the designated body to develop strategic minerals as given in tripartite terms of reference agreed among the economic affairs and finance ministries, and the DHI during its incorporation, the SMCL annual report 2017 states.

The mineral development policy 2017 grants prerogative authority to the government in allocating strategic minerals.

“Geology and mines department has confirmed that SMCL will not be allocated strategic minerals, but treated as any other mining company,” the report states. “Such inconsistency over strategic minerals undermines the company strategic planning and investment efforts.”

The company started operation of Tshophangma coal mine, its second mine, in August 2017.

The two mines, Habrang and Tshophangma, together produced 53,622.15MT, the latter mine yielding almost 12,900MT.

SMCL was incorporated as a Druk Holdings and Investment Company in December 2014.

Today, the company only sells coal. The company has two stone quarries, Dzongthung stone quarry in Trashigang, and Kharibari Dara stone quarry in Samtse. A proposal for the Urichu Gypsum mine is waiting endorsement from the dzongkhag tshogdu in Pemagatshel. The company has explored a third mine in Samdrupjonghar, Kalanadi coalmine, covering 89 acres.

As the Kholongchu hydroelectric project has been delayed, the Dzongthung stone quarry, which was set up to supply aggregates to the project, has been affected.

The company reported severe cash flow problems, with one of their client companies, Dungsam Cement Corporation Ltd, owing them Nu 96.35M. SMCL supplies coal to DCCL, Lhaki Cement, and Penden Cement Authority Ltd. SMCL sold 41,111.36MT of coal earning Nu 260.44MT, of which 37,283MT was to DCCL.

The company suffered revenue loss because of high ash content in its coal, and paid in penalties to the tune of Nu 20.07M.

The company provided drinking water to Khatoethang chiwog, Phuntshothang worth Nu 0.27M. Some 22-tipper trucks belonging to locals were employed at the Habrang coal mine and local residents worked for 6,881 days earning Nu 7.01M last year.

Students from the communities worked for 676 days at the coalmines during vacation and took home about Nu 0.51M.

Tshering Palden

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