Govt. might allot non-strategic mines to the private sector towards the year-end

MB Subba 

Even as a new Mines and Minerals Act is being enacted, the Department of Geology and Mines (DGM) this month adopted Mines Restoration Guidelines 2021 to revive the natural ecosystem at the mined areas.

The mines restoration process includes slope stabilsation, slope dressing, civil works and plantations. The mined-out area may be reclaimed for other purposes like parks and playgrounds.

Economic affairs minister, Loknath Sharma, said the guidelines had to be framed as the previous rules were unclear. “The guidelines have been strengthened for implementation in the best interest of the affected community and the country,” he said.

The mine restoration guidelines make it mandatory for the lessee to complete the restoration process before the closure of the lease. As per the guidelines, the leases should also restore the land disturbed to acceptable post-mining land use.

The lessee shall nurture and monitor the plantations, properly fence the plantation areas by barbed wire fencing and bamboo mat enclosures. The guideline outlines the details of the responsibilities of the miner and the government.

The guidelines will apply to all the mines. The SMCL CEO refused to comment.

Meanwhile the State Mining Corporation Limited (SMCL) has taken over all gypsum, dolomite and coal mines in the country, as the government did not renew the lease of private operators. The Jigme Mining Limited is the latest to come under the portfolio of SMCL after the expiry of its lease period.

Only quarries that produce construction materials are operated by private companies today.

However, the SMCL’s capacity to operate all the mines effectively in the optimal capacity has been questioned, as it is a state-owned company and due to the Covid-19 situation. A lack of optimal operation could result in revenue losses, according to observers.

Lyonpo Loknath Sharma said that the SMCL was “overloaded” as all the mines have been handed over to the company. He said that the government was trying to maintain the market despite the Covid-19 situation.

He added that the suspension of the renewal of mining leases was temporary. “It would be inconvenient for both the government and the private mining companies to adjust with the new Act later,” he said, adding that a lease period could be as long as 15 years but that the Act can be passed in the upcoming session of Parliament.

Lyonpo said that non-strategic mines could be allocated to private individuals if the new Act retains such a provision. He said that it was not possible to correctly predict the outcome of the new mining Bill, which will be debated in a joint sitting of the upcoming summer session, as it is a disputed Bill.

The National Assembly is in favour of nationalisation of strategic mines and leaving non-strategic mines open to private sector while the National Council is pushing for nationalisation of all mines. “We want to have a mining law that will benefit all, and I hope the wisdom will prevail,” he said.

One of the advantages of handing over the mines temporarily to SMCL, he said, was the government would able to know the real market situation and prices of mines through enhanced transparency. “We can have market-related information about mines through SMCL as a government-owned company.”

DGM’s director general, Choiten Wangchuk, said that there was a plan to implement the new mining Act six months after its adoption.

This could mean that the government may allot mines to the private sector towards the end of the year if the Act makes such a provision.

“There are no large private mines in operation as all gypsum, coal and dolomite mines have been handed over temporarily to SMCL,” he said, adding that the future would be decided as per the new Act.

Choiten Wangchuk said that the handing over of mines to SMCL has been smooth as it took over both equipment and human resources from private operators in some cases. He said that taking over of some of the mines by the SMCL was delayed due to the pandemic.

SMCL, which was incorporated under the Companies Act of Kingdom as DHI’s 100 percent subsidiary company in December 2014, has become a profitable company. The profit after tax (PAT) in 2019 was Nu 336.35 million (M) compared to Nu 91.39M in 2018. The growth was spurred mainly by the gypsum business.