NC’s proposal brings mines under the scanner

The National Council (NC) that has again taken up the issue of mining and natural resources conservation has passed three recommendations with regards to the sector’s activities and future direction during its session on Thursday.

Councilor Jigme Rinzin, chairperson of the council’s natural resources and environment committee said that it would recommend the impact, cost, benefits, and other related issues pertaining to the mining sector to the government.

The first recommendation is to form an ad hoc body in the NC for conducting a comprehensive cost benefit analysis of mining and quarrying, with special focus on its social, economic and environmental impacts.

The second recommendation states that the government must refrain from issuing both mining and quarrying licenses to Foreign Direct Investment (FDI) companies until the Council had completed studying the sector.

It was learnt that a French company, Lafarge, had shown interest to tie up with a local mining company two years ago, but approval was not issued by the DGM since it was waiting for the mining and mineral policy to be adopted.

This is a deviation from the 10th session’s resolution, which recommended the government to freeze all kinds of licenses until all eight recommendations resolved in the 10th session were implemented.

While the remaining six recommendations resolved during the 10th session are being implemented, it has not been reflected this time.

The last recommendation was that the Royal Audit Authority (RAA) will conduct a performance audit report on the system of taxation in the mining sector. Many concerns were expressed that the mine and quarry owners were not paying correct taxes to the government.

A report was also prepared by the house on the socio economic and environmental assessment of mining and quarrying activities in the country, which was published in February this year.

The report includes issues and concerns of understatement of income, non-declaration of full sales proceeds, and discrepancies in the taxation system of captive mine owners.

The mining sector on an average contributes NU 200mn to the government as revenue.

The top five tax contributors from the private sector were all mining industries which included Jigme Mining Company Ltd, Eastern Bhutan Ferro Silicon Pvt. Ltd, SD Eastern Bhutan Coal Company Ltd, Druk Satair Corporation and Jigme Industries.

They contributed a total revenue of NU 227mn as taxes. On the legality of imposing restrictions on mining activities by the Dzongkhag Tshogdu (DT) within their geographical jurisdiction, it is found that there is no conflict in the legal interpretation of the provisions of the Minerals Management Act 1995 and Local Government Act of Kingdom of Bhutan 2009.

In fact, the two are found to be supplementing and complementing each other. While the Dzongkhag Tshogdu has the authority to issue or deny environmental clearance in consultation with public, it has no authority to impose blanket restriction on mining activities within their geographical jurisdiction.

The authority to issue licenses rested only with the ministry.

While the DGM has the authority to issue mining license, it can do so only after environmental clearance is issued by the Dzongkhag Tshogdu.

The NC resolved that mineral resources are state properties and must be used in the most careful manner for the benefit of the country and people for all times to come.

It has called for a comprehensive study of the sector for making any subsequent decisions on the future direction of mining and quarrying activities in the country.

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