Mines and Mineral Bill of Bhutan 2020 adopted with big changes

The Parliament has adopted the Mines and Mineral Bill of Bhutan 2020 along with amendments made to the former Act on 30 January.

Numerous deliberations towards the expedient need to reform the law on minerals and mines, in order to ensure inter-generational equity and sustainability of the mineral resources in reciprocation with the philosophy of Gross National Happiness was made in the Parliament over a course of 6 days.

The major reforms in the Bill came through the heightening of broad-based ownership of public share of mining, which was previously at 30 percent raised to 49 percent, in line with the ‘narrowing the gap’ policy reportedly.

A Bhutan Mining Authority as a regulatory body was also created. The lease period was kept at 20 years for a mine and 25 years for a captive mine.

A lessee has to ensure a minimum of 30 percent of employment to the community and allocate free equity shares to the affected community a minimum of three percent of the total equity floated to the public.

The State has to plough back upto 10 percent of the royalty received from the lessee to the community for the following purposes but not limiting to: 1. Agriculture and other livelihood conservation and enhancement programs 2. Timely maintenance of road 3. Ensure safe and clean drinking and irrigation water 4. Periodic health check-up 5. Compensation for displacement and resettlement.

The State also has allocate to Bhutan for Life Fund and Bhutan Health Trust Fund three percent each from the annual revenue of the mining sector.

Negligence will not grant any immunity under the Act.

The parliament amplified the penalties for major offences relating to mines such as; carrying out prospecting works or exploration operations of minerals without prior approval in compliance to the Act.

The provision for fine as per the bill for such non-compliances was presented at an equivalent of 40 days’ daily national wage which was deemed lenient by the committee as the new subsection 4 of section 175 of the bill raised the offender’s penalty for the same to 365 days after the house concurred on the committee’s recommendation.

Major offences like abandoning the mine or any portion of the mine lease area with potential risk to the health and safety of a person or the community and altering or removing any mine boundary pillar without approval have similar penalty implications.

Other major offences comprise of abandonment of mine or leased areas which may result in health hazards for the communities coined as ‘affected communities’, or any alteration or removal of mine boundary pillar without consented approval will have stringent laws implied as well.

From a bill provision of 4 months, the fine was substantially raised to 30 months for such offenders until they get clearance through rectification procedures.

Since mining works have led to a lot of hassles for the nearby communities, the house came to an agreement on what the ‘affected community’ definition should be based on.

The bill states that, residents affected by the operation of a mine or related activity will be put under this definition.

Furthermore, those residents directly impacted due to geographic, atmospheric and other conditions will be jointly determined by the authority, local government, department and the national environment commission. Under the bill, preference for surface collection shall be given to the affected community.

The activity will be monitored by the Department of Forest after the Authority delegates the Gewog Administration to permit non-commercial surface collection of sand and stones and artisanal collection for rural purpose.

Gewog Tshogde and Thromde Tshogde with consensus from the directly affected community will make issuance of Rights Certificate for short term mining, fossicking, surface collection for commercial purpose or artisanal collection under the bill.

Prescribing conditions of competition through price control and promoting markets through enabling-measures and strategies were moved to the power and functions of the Department under the bill.

The department is further ensued of responsibilities such as; carrying out geological mappings at regional scale as a primary source of information on geology for land planning, environmental monitoring, seismic risks and geohazards prevention, civil works planning and mineral resource of the country.

Other additions that the department will also be responsible for are receiving applications, processing, issuance of prospecting and permits, issuing exploration license, Mining Rights Certificate for new mine and renewal and others roles falling under the act.

Imposing fee and charges, issuance of moratorium on constructions and developmental works for sites identified for future mineral development, instituting appropriate mechanism of annual appraisal, ranking and recognition of mining operators as per a standard criterion will be taken up by the Board under the bill. Any implementation and enforcement of relevant provisions of this Act, the rules, and regulations thereof will be the responsibility of the Board.

For mineral prospecting and exploration works, the house came to a decision that a written consent from the land owner or any person in custody of such potentially identified mining area in a private property shall be mandatory as per section 54 along with new section after section 60 stating a provision of fair compensation to the private land owner for any damages caused during prospecting (if any).

A new section after section 72 was added to enable fair compensation mechanism for the private land owners and affected community for damage caused during exploration.

Allocation of mineral reserves proven by the Department is to be done by the process of public notification through open competitive bidding process or to a state-owned enterprise.

The lessees are obligated to comply to start operations of the processing industry within three years of obtaining the lease for captive mine. As per the bill, the lessees are required to ensure 100 % employment of Bhutanese nationals except for the short-term technical experts.

The lessees are required to submit a Disaster Management and Contingency plan to the authority for approval for the operations of underground mines- considering the potential environmental and social hazards.

A long-term vision was put in place, in terms of developmental works in the mining sector, enhancing mineral value chain, achieving economy of scale of mines, ensuring broad-based ownership and enhancing scientific, environmental-friendly and socially responsible operations while addressing the need for better transparency and accountability.

Such a progressive law to regulate operations regulation was deemed imperative by the parliamentarians during the sessions.

About Abhinaya Chhetri

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