Rishore Coal Mine: Currently there are 89 mining leases are in operation with 150 new applications.

Draft Mineral Development Policy 12 March, 2010 - To ensure equitable distribution of wealth, the draft mineral development policy has proposed a “One mining lease to an individual or to a company.”

Individuals, in the policy, refer to a single family consisting of his or her spouse, children and immediate dependants. The policy however says that there will be no restriction on mines obtained through government auction.

However, mines already awarded will not fall in the category until the lease period is over.

Bhutan today has 89 mines under operation and DGM has received about 150 applications for opening new mines. Most of the new applicants are owners of the 89 mines in operation.

“The draft policy is for the development of the mining sector in a equitable, safe, more value added and environment friendly way,” said DGM acting director general, Yeshey Dorji. He said that DGM was consulting various stakeholders and would welcome feedback.

To discourage the export of raw minerals and encourage value addition, an additional tax, which could be fixed up to 20 percent of the selling price on the raw minerals, is also proposed.

For open auction of proven mines by the government, preference will be given to industries, which can add value by processing raw material. With the aim of providing affordable construction material, the policy proposes to auction stone quarries to the lowest bidder or one who can provide stones at the lowest price.

For people losing their land to mining, the government will not only provide rehabilitation land and compensation, but the landowner will also be given equity shares in the mine, worth 50 percent of the value of compensation.

The mine will have to reserve 25 percent employment to the local community and 75 percent of the skilled employees should be Bhutanese. Unlike today, applicants will also have to explain the environmental impacts of the mines to the local people before getting any clearance.

Since prospecting for high value minerals is a high risk and investment venture the government has also outlined fiscal incentives.

Tax breaks could be given for expenditure incurred on community development. Mining companies issuing beyond 30 percent of equity share to the local community and general public will be entitled to income tax rebate for three years. The CIT/BIT of companies will be exempted on costs incurred for long term or specialised training of employees and equipment purchased for mineral survey and exploration will be exempted from sales tax and customs duty.

With the aim of promoting better quality mining, applicants will have to apply for a prospecting license and prove that there are profitable deposits before getting a mining lease. Currently anyone can directly apply for a mining lease regardless of qualifications.

“The prospecting license requires a certain knowledge either by the applicant or his or her consultant or employee on mining,” said MK Pradhan the head of the mining department.

However, mining leases and procedures will be simplified, especially for small quarries where only certain requirement will have to be fulfilled.

Duplication among agencies and difference between various laws on mining will also be harmonised. Unlike now, new mines will get a grace period of three months to two years to comply with mining plan requirements.

The policy also calls for the formation of an autonomous mineral development authority (MDA) to carry out the functions of the mining division. It will develop rules, process and issue mines, conduct actions, inspect mines, fix mineral levies and ensure mine restoration.

“MDA will allow more capacity like manpower and resources to be made available and there’ll be more effective monitoring of the mines” said MK Pradhan.

For upgrading its capacity in the mining sector, the government will provide funds, training scholarships, labs and also allow hiring of mining experts on short terms.

To check possible collusion and loss of revenue, MDA will install weigh bridges in strategic locations to ensure that dispatch inspectors do not underreport. For preventing idle holding of mines, if a miner does not mine 33 percent his annual capacity for three years, the lease will be cancelled. People, whose mining leases have been terminated for not following rules, will not get a lease for 10 years after the termination.

For ensuring environmental conservation, MDA shall permit mining only at what is a safe distance from human settlements, infrastructure, cultural sites, ecologically fragile sites and mines in the upstream areas will not be allowed to negatively affect low lying settled areas. The policy states that investment in the mining will be made as per the FDI policy.