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Decision on value-added deferment deferred

The cabinet is not taking any decision on the proposal to defer adding value to mineral products for export, since the government has only 10 more days in office before its term ends.

This means miners will have to continue adding value to minerals for export, as opposed to selling it in its raw form, a requirement the geology and mines department put in place in June 2006.

The economic development policy that came out in 2010 also states the need for value addition to any mineral products that has to be exported.

Since then, the DGM has not been accepting any applications for mines, which do not fulfill the value addition requirement.

In the proposal submitted to the government on Tuesday, the DGM had initially proposed the government to do away with the value addition requirement for another two years, as a quick means to earn some hard cash.

While some miners welcomed this move, others whispered dissatisfaction, the latter being mostly those who have already invested in man and machine to value add.

Since the value addition requirement, miners, who have not been able to value add, have been compelled to sell their raw minerals to domestic industries.

For example, the Onchina quartzite mine in Chukha sells its quartzite to ferrosilicon industries in the country.

The Tintaley quartzite mine in the same dzongkhag, however, has its own ferrosilicon industry.  So it serves as a captive mine.

The SAFTA (South Asian free trade agreement) requires only 30 percent value addition for an LDC country like Bhutan, but Bhutanese regulations require a 40 percent value addition.

Given the value addition requirement, applicants for mining licenses have not been able to qualify.  For example, in 2011, the DGM received 65 applications, of which none were provided licenses to operate a mine.

Last year, it received 55 applications, but gave only six licenses.

The head of DGM’s mining division, Sangay Tshering, said applications for mines are much higher, but whenever they are asked to value add, they back off.

Meanwhile, the mineral development policy, which provides an overall roadmap for the country’s mining sector, is yet to be adopted.

The policy was supposed to be out by 2012, according to senior officials from the economic affairs ministry.  But the policy has not been able to get past the GNH screening test that is applied to all policies, and its adoption has therefore been delayed.

The mining sector roughly contributes around Nu 200M every year.

By Nidup Gyeltshen 

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