Losses of State Mining Corporation improves

The State Mining Corporation Limited (SMCL) reduced its first year operational losses to Nu 3.89 million in 2016 mainly from the sale of 1000 metric tonnes (MT) of coal to Dungsam Cement from the Habrang coalmine, according to a press release from the company.

The press released stated that production of the Habrang Coal Mine, which started from August 2016, generated a gross revenue of Nu 67.698 million during the five months of its operation from the sale of 1000 MT of coal to Dungsam Cement.

This reduced the first year’s loss of Nu 11 million to Nu 3.89 m as on 31st December 2016.

During the official launch of the company’s annual report the Chief Executive Officer, Kezang Jamtsho, said that during the year the management focused on two more projects, Tshophangma Coal Mine and Dzongthung stone Quarry and crushing Plant (DSQ & CP), for operation in 2017. The projects will supply stone, aggregate and crushed, and washed sands to Kholongchhu Hydro Electric Project.

He said the project is the first of its kind under a national management to supply quality stone-derived construction material for hydropower infrastructure construction. “The earlier hydropower projects procured stones crushed by the contract firms from outside Bhutan, but this time it has been given to the SMCL and we’ve been preparing for it,” Kezang Jamtsho said. “Supply of aggregates to hydro plants is a very knowledge and financial intensive business, where there is the need to produce high quality construction materials but I’ve visited our local firms and found that they produce very low quality products which are not in line with our stringent quality standard required for the hydropower construction.”

The CEO also highlighted existing challenges faced by the company in achieving its mandated targets. “Although we have been functioning without a Mineral Development Policy for a very long time, I hope the recently launched Mineral Development Policy will guide our strategic planning and programming on a long-term horizon,” he said. “The other challenge faced in the Mineral Development Sector is transportation.”

The CEO said that since most minerals are bulky transportation makes up 30-40% of total cost. “The restriction on carrying capacity due to the conditions of the roads and the bridges in country renders some of the projects totally inefficient or infeasible which greatly affects the profit earning of the business,” he pointed out.

Kezang Jamtsho said the company was recently in the limelight for a wrong reason where people alleged that SMCL trucks are carrying heavy loads on the Bangtar/Samdrup Jongkhar highway and damaging the roads. “We felt like a victim rather than the perpetrator,” he said. “Our transportation system is not built for efficiency and people point fingers at us instead. There is a need to build efficient roads and bridges to carry appropriate tonnage to create a favorable environment for such business like ours.”

The Company is also facing the peculiar challenge known as ‘pinching and swelling’ of the coal seams. “If the coal seam pinches, you have to explore for other seams which consumes lot of time and has financial implications. We get lucky if the coal seam swells, which means that the initial small mineral becomes bigger as we progress with the mining, but such an occurrence in the mineral sector is quite rare,” said the CEO.

Kezang Jamtsho said that the management has so far gained lot of experiencs in coal mining and that their effort in all project activities must be on either increasing efficiency or reducing costs and said the outlook in coal mining for 2017 is favorable.

SMCL was instituted to participate along with private business and leverage best mining practices to ensure sustainable development of the mining sector and contribute to the national economy by expanding economic opportunities, generate employment and more revenue. It is one of the new companies formed under DHI and is a 100% DHI owned subsidiary with its corporate office in Samtse.

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