Prime Minister Dr Lotay Tshering

PM lays down a middle path in the mining debate

The cancellation of the auction of the Chunaikhola dolomite mine, its handing over to SMCL for now, the National Council praise for the move and National Assembly’s rejection of NC’s motion to also hand over other mines has all treated a heated national debate on whether mines should be nationalized or not.

The debate also appears to not be settled within the cabinet itself as the Prime Minister Dr Lotay Tshering during the meet-the-press session on Friday, did not allow the Minister for Economic Affairs Lyonpo Loknath to address the issue though the minister had come with a thick file and clearly wanted to explain the ministry’s stance on it.

The MoEA minister in a previous interview to the paper had said while a larger government decision is awaited, as far as his ministry is concerned there is no plan to nationalize the dolomite mine as it is not a strategic mineral and there are plenty of reserves.

The Prime Minister in an interview with the paper laid out a clear middle path or a ‘third pole’ position where he said what matters at the end of the day is not the nationalization versus the privatization debate, but a system where there would be the best benefit for the state and the people.

During the meet-the-press, the Prime Minister taking on those who directly argued for nationalization quoting the Constitution stated that there was some confusion on how some quoted the Constitution to suit their arguments.

The PM said some quoted the Constitution Article 1 section 12 as, ‘The right over mineral resources…. shall vest in the state and are the property of the State and so it belongs to the State -and therefore it must be nationalized,’ which the PM clarified saying is that, ‘…are the properties of the State, which shall be regulated by law.’

In regard to the law he said that as of today, the law is the 1995 Mines and Minerals Act, which give the authority to the Department of Geology and Mines under the Ministry of Economic Affairs and DGM has drafted a regulation in empowered by the Act.

PM said, “Regulation 16 clearly states pre-deposited mines and minerals must be tendered through open, sealed, closed bid, and that means it is required to be auctioned.”

“I clearly said nationalization process has started because the Mines and Minerals Bill is in the Parliament, and is being discussed and being deliberated upon. And within that, this clause can be changed and it is being changed, whether it will come out changed or as it is, we don’t know yet,” he added.

He said that there is a provision which states that the government can decide. The PM further said, “I am not preempting whether it will come out as it is or not, we don’t know, the nationalization process has started and that is the provision.”

The PM is referring to section 79 of the Mines and Mineral Bill which says, ‘All mineral reserve proven by the Department shall be allocated through public notification either through open competitive bidding process or to a State Owned Enterprise.”

The new bill already gives the power to the government to hand over mines to a SOE.

Lyonchhen said that regarding nationalization versus privatization, people tend to take it as two poles, but as per him the case is not different.

“All those who are talking on nationalization front, meaning it should benefit the country, then even I am in on that. Whatever we do must benefit the state and the Bhutanese, but which one will benefit, we can discuss on it and so maybe it is nationalization that will benefit our people more or maybe it is privatization which will benefit the Bhutanese more,” the PM said.

PM stated that when the National Assembly did not support the National Council’s recommendation, it was made to seem as if the House was against nationalization.

He added, “When the National Assembly Speaker asked for votes by show of hands, the query is on how many are in favor and we are not being asked as to how many are not in favor, and these two are totally different cases.”

PM clarified, “When one as asked for votes by the process of hand raising- it does not necessarily mean that those who did not raise their hands did not accept it. Yes, we had acceptance and we would like to qualify it but there is no provision for that.”

“NC had mentioned the decision to give the dolomite mine to SMCL as a bold decision by the government and they asked to continue nationalizing mines and minerals until the Bill is out. When we all support that it doesn’t work, as by that definition, even stone quarries would have to be nationalized,” stated the PM.

The PM said that it is important to understand the Constitution, Mines and Minerals Act 1995 and the regulations. The Mines and Minerals Bill is being discussed in the Parliament currently.

He added that the Constitution is a very powerful document, where Article 1 section 12 and Article 5 section 4 must be read together. He said 5.4 clearly outlines that the State must ensure sustainable use of natural resources and maintain intergenerational equity.

PM said, “In that case, what is dolomite? A strategic or a non-strategic mineral? I really do not know. A 2004-2005 study says we have enough deposit (of dolomite) for 200 years. Most people stop exploring on this part. But the study says ‘at the present rate of extraction’, that means at the rate of extraction of 2004 and 2005, which I think it has increased.”

He added that similarly in a decade or two, with better technology the efficiency of extraction would increase. In that case, the deposit might diminish within 20 years. And with an even superior technology in another decade or so, the deposit could last just 2 years, in which case time doesn’t matter.

He questioned, “Bhutan is a dot on this globe. Whatever we have within this small dot, we do not have an enough of quantity, and since we do not have enough quantity, which mineral is not strategic for Bhutan?” Following which the PM stated that everything is strategic for Bhutan.

Adding to it he said, “Right now, when we talk about the market for dolomite, we are talking about the market across the border. But what if we had express trains going from southern foothill to Europe taking all these minerals? The value could be a thousand times more.”

He said that since things are not certain with the Indian border at this time due to COVID-19, we cannot predict another lockdown, and from the business point of view, the current time is not very viable and it would not be wise to put it for auction, and therefore, for the time being SMCL has been given the mine to keep the operations on and not to make business or profit.

The PM added, “The handover to SMCL is because the present mining lease ends by the end of this month, so there has to be a transition period then we will have all the time to sit on it and decide on what is best for the country.”

PM said that currently the Economic Affairs Ministry has been asked to clear out the transition smoothly within 6 months of time, after which it will be decided on whether to go for privatization, nationalization or the third pole, depending on what is the best decision for the country.

He added “In terms of this, please follow us, we have 3 more years to cover it.”

The Economic Affairs minister said that about 3 billion tons reserves are estimated to be at Chunaikhola and as for the country around 15 billion tons worth of dolomite deposits is there.

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