Studying Bhutan’s Mining Sector

A trend of increasing mineral extraction indicated by increased production statistics, increasing number of leases issued and revenue generated, leave no doubt that the mining and quarrying sector is slowly expanding. This is attributable to (i) growing exports of minerals, and (ii) increasing domestic consumption by industries as raw materials, and (iii) constructions.

Information from the Department of Geology and Mines allows one to arrive at a rough estimate of direct revenue from mines (direct taxes and CIT from a few mine operators whose information is available) of Nu. 377 million. It is a tidy amount for Bhutan. However, a concern has been the environmental impact of mining and quarry given Bhutan’s fragile ecosystem. While the growth in the sector as part of the primary sector is certainly good, environmental concerns cannot be understated, especially in Bhutan.

A study conducted by the National Environmental Commission in 2009 of 63 mines clearly indicate that there have been ‘less than’ satisfactory compliance to rules and regulations by both regulators and operators. Many issues have been identified that the relevant agencies need to work on.

‘It is an accepted fact that mining cases disturbance and damage to the environment. The magnitude of impact on environment depends upon the geological formation of the mining area and the method of mining operation. All mines in the country are of open-case type which could affect the environment by changing the landscape, Ph medium of soil and water, flora and fauna, and socio-economic aspects.’

However, the annual report of the Ministry of Economic Affairs mentions the completion of a Draft Mineral Development Policy aimed at bringing changes in the allocation of mines/quarries and to have a properly planned, efficiently regulated and professionally managed mineral industry. It also states that social and environmental consequences and their management are adequately addressed. However, the draft policy is not yet approved. In the absence of such a policy, in 2011 there were 192 applications for operating quarries and mines out of which 12 stone quarries and 1 limestone mine were leased. Pre-feasibility studies for 140 sites have been completed out of which 38 are under process.

The aim of the draft policy revolving around the changes in the allocation of mines and quarries and to have a properly planned, efficiently regulated and professionally managed mineral industry seems logical given the impact mining and quarrying has on locals dwelling around the site.

A logical understanding seems to me that the people who suffer as a consequence of mining and quarrying around an area benefit out of it more than any other. The pros and cons of economic returns between ownership by the private sector and nationalization (sovereign fund and/or non-transferrable shares by every Bhutanese and others) need to be studied. This is nothing new for Bhutan given our investment approach in the hydropower sector too and earlier approach of establishment of NRDCL.

It is based on this premise that one may believe that a change in the model of operation of mines and quarries in Bhutan needs a re-visit. Any such important debate needs a sound basis which is why a proposal to conduct a study of the sector is being proposed, both environmental and others.

Therefore, a motion proposing a study of the mines and quarry sector is made but not limited to the list. In order to facilitate a meaningful study, it was proposed that a committee of the National Council be tasked with the mandate of drawing up a Terms of Reference for the study and then submit its findings to the 10th session of the House for discussion on (i)  Environmental impact of mining and quarrying in Bhutan,(ii)  Rationality of revenue and market prices of minerals mined and quarried in Bhutan, and (iii) Pros and cons of nationalization of mines and quarries in Bhutan.

The National Council supporting the proposal resolved to direct the Natural Resources and Environment Committee to take lead, I will be joining the Committee too.

 

 The writer is the NC of Gasa

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