NC recommends for greater role of SMC

National Council (NC), in its 17th Session, discussed issues pertaining to the minerals and mining sector. The House discussed on the rights and ownership of mineral resources granted under the Constitution of Bhutan, and growing corruption in the sector was also highlighted during the discussion.

On the questions put up by NC during the 17th Session, the Economic Affairs Minister made general remarks that the government has declared the mining sector as one of the five jewels of the economy due to its immense economic potential. He said the sector is an important source of industrial growth and revenue.

During the Question Hour session, the House stated that the recently adopted Companies Act must help to address corruption in the mining sector.

The House was informed that the amendments to the Mines and Minerals Management Act (MMMA) 1995 may take up to a year and half, and that the Mineral Development Policy (MDP) is yet to be approved in a month or two.

Lyonpo Lekey Dorji stated that giving exclusive rights over strategic minerals to State Mining Corporation (SMC) alone would be a problem in future, citing examples of the countries, like China and former Soviet Union, where State Owned Enterprise (SOE) has not been successful.

According to studies made in the area, 70-80 percent of the coal and gypsum shares are with promoters and the general public holds a minority share. Pertaining to that status, Lyonpo said that there is a need to float at least 50 percent share to the public, which would be mentioned in MDP.

However, an additional debate was called by NC on the insufficient reason for not granting special status and rights to SMC over strategic minerals and on broader justifications, for granting SMC more prominent role and exclusive rights over strategic minerals.

One given justification was that the profit from the private sector is offset due to corruption, where the Royal Audit Authority (RAA) Report in 2014 states the corruption in mining sector is estimated to be Nu 134 million annually, between 2008 and 2012.

Chairperson of the Economic Affairs Committee, Sonam Dorji, stated, “It’s vital to nationalize and ensure the country’s mineral wealth benefits all the people and not just the few wealthy individuals having access to mining licenses.” Adding that continuation to such practice will lead wealth inequality in society, giving a result in unjust and undesirable social, economic and political results.

However, based on the views made earlier during the session, the recommendations were made that the exclusive right be granted to SMC over strategic minerals and that the private sector companies be engaged in value addition only.

Sonam Dorji added, “Private sector is not the best option if the end goal of the mineral sector development is to ensure tangible benefits to the people  and create just and harmonious society.” He added that a stronger support from the government to SMC will benefit state ownership, and thus help in achieving the national goal of just and harmonious society.

The recommendation includes the urgent need to amend MMMA 1995 as the Constitution requires the mineral sector to be regulated by law, and to publish the list of owners of mines in Bhutan and shareholding patterns.

NC also included that the special role be made for SMC, a Druk Holding & Investments (DHI) owned company, with preferential treatment to be defined in MDP, and that all the primary mining activities to be conducted in partnership with SMC.

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