The ownership of mineral resources vests in the State and consequently the mines and mineral management Act (MMMA) 1995 conflicts with the Constitution, the national law review taskforce stated.
It also stated that the Act was enacted before the adoption of the Constitution and has never been amended since 1995.
The national law review taskforce’s report cited Article 1, Section 12 of the Constitution, which states “The rights over mineral resources, rivers, lakes and forests shall vest in the State and are the properties of the State, which shall be regulated by law.”
Further the Article 9, Section 7 mandates the State to develop and execute policies to minimize inequalities of income, the concentration of wealth, and promote equitable distribution of public facilities among individuals and people living in different parts of the Kingdom.
The report also mentioned Article 9, Section 9 which states that the State shall endeavour to ensure that all Dzongkhags are treated with equity on the basis of different needs so that the allocation of natural resources results in comparable socio-economic development.
The following section also mentions that the state shall encourage and foster private sector development through fair market competition and prevent commercial monopolies.
The task force, in its report justified that the creation of Natural Resources Development Corporation Ltd (NRDCL) in 2007 to manage natural resources, establishment of Druk Holding and Investment (DHI) in 2007 as a corporate arm of the government, and the State Mining Corporation Ltd. in 2014 for management and development of mines and mineral resources, were all aimed at minimizing inequalities of income and concentration of wealth.
The taskforce recommended that the Mines and Minerals Management Act, 1995, must be harmonized and amended based on the above provision of the Constitution that vests the ownership of mineral resources in the State.
“In particular, those provisions in the Act and the rules that give mining rights to private mining companies must be amended so that there are no infractions of the constitutional provisions,” the report stated.
Meanwhile, there is a mineral development policy in place and the recent mineral development policy 2017 took eight years to get approval.
The National Council last year recommended pausing the implementation of mineral development policy until the Mine and Mineral Act is amended, stating it was inconsistent with the provisions of the Constitution.
Prior to that the Council also recommended nationalizing all the mining activities as it was seen as benefitting a few individuals.
The debate started in 2015 when the National Council questioned the legality of mining in the country, especially after the State Mining Corporation was formed.
However, the government’s stand was that its role should be limited to facilitating and regulating businesses rather than doing the business. The then economic affairs minister, Norbu Wangchuk, during a question hour in 2015, justified that nationalizing mines is not in line with “principles of liberal democracy.”
He had also argued that Constitution also does not allow Parliament to enact laws that allow monopoly and that the Public Finance Act did not allow the government to operate state businesses where private sectors were already involved. It was also justified that private sector pumps in huge revenue to the government from royalties and taxes.
The National Council, last year again raised its concerns over the provisions of the Constitution that are being overlooked in the mineral development policy and the Act itself.
Council members argued that when state resources are used in the interest of few people, it not only disregards the state policy of just society but also widens inequalities between the rich and poor.
In recommending to halt the implementation of mineral development policy, the Council justified that it is exercising the provision of the Constitution whereby the Parliament is mandated to ensure that government safeguards the interests of the nation and fulfills the aspirations of people through public review of policies and issues, Bills and other legislation, and scrutiny of State functions.
The Druk Holding and Investments (DHI) was also arguing along the same lines and raised its concerns on mineral resources being exploited by a few individuals.
The future of State Mining Corporation (SMC), a subsidiary of DHI, is still uncertain as the company was also denied a license to mine certain minerals.