The real story in the Mining Bill is not just the deferral of the Mining Bill or the debate between the National Council and National Assembly members, but it is something more complex and fundamental.
When we talk of mines we are essentially talking of Dolomite, Gypsum and Coal.
Despite the NC’s call for nationalization a long time ago, the mood until not long ago was to let the private sector handle mines after a fair auction process.
However, things started souring when there were media stories, an ACC investigation into corrupt practices in Talc mining and an RAA performance audit showing poor mining practices.
Things got much worse with a special RAA report on the big mines above showing an array of irregularities including how small shareholders were being cheated.
It was after that the NC started paying close attention to the mining sector and issues of equity also came up.
Things started turning when the State Mining Corporation Limited’s (SMCL) Gypsum and Coal revenues were higher with reduced costs and that too after supplying coal cheaper to local industries.
But, what really broke the camel’s back was when the SMCL took over the Dolomite mine and right away started getting double the price for the same mineral from almost the same buyers.
The implications of this price difference are mind boggling looking at the huge revenues from dolomite.
The mining companies in Bhutan have made huge profits over the years in this business and those who believe in the free market always felt that it was their efficiency and business acumen that got them there.
However, the above shows that the current mood and state of affairs is largely their doing.
The mining companies could have chosen to run modern and transparent companies that declared its real revenue and taxes, that protected its minority shareholders, did not engage in mutual backscratching among the bigger shareholders and gave back to society.
However, they chose to behave like robber barons and this is something inexcusable in an aid dependent country with limited resources. The behavior of the big three companies may have sealed the fate of private sector participation in big mines and this is a lesson for the large companies in the private sector.
A business that makes nothing but money is a poor business.