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State Mining Corporation takes off

With five stone quarries to begin with

Resources: The last day of the year marked a milestone event in the mining sector with economic affairs ministry formally handing over  the State Mining Corporation (SMC) and the company’s incorporation certificate to the Druk Holding and Investments (DHI), yesterday.

The corporation, like a New Year gift, also received five stone quarries at Kholongchhu Proejct to supply raw materials for the construction of the 600MW project.

To take the SMC forward, DHI has put in place a small management team, which will immediately explore potential markets for phyllite and subsequently mine the mineral on a priority basis as desired by the economic affairs ministry. Phyllite is a type of foliated metamorphic rock created from slate.

The SMC will also initiate exploration of gypsum, and coal to be supplied to Dungsam Cement Corporation Limited and Penden Cement Authority Limited.

The DHI has already floated the tender to hire a consultancy firm for carrying out geological investigation and final mining feasibility study of Bhangtar Coal Mine.

SMC, officiating director of geology and mines department, Ugyen Wangda said, was established with the objective to lead the way for scientific and responsible mining. “The intent of SMC is not to nationalise mining activities, but to add value and support the efforts of privates sector and optimize returns,” he said.

The economic affairs minister, Norbu Wangchuk said that there are some things in mining that private sector cannot perform and some aspects SMC may be able to do. Thus, he said SMC’s role would only enhance the GDP contribution from mining sector, which currently is a meager two percent. “But mining sector is crucial for the local industries, whose revenue contribution in taxes are whopping,” he said.

The SMC would explore markets outside the country for mineral and act as a “whole sale exporter” for mineral developed by private sector upon their request.

While the draft mineral policy allows the country to export minerals only in processed form or with value addition, the officiating director said export of minerals in raw form is now permitted with the approval of economic affairs ministry.

In an earlier interview, Lyonpo Norbu Wangchuk said that some mineral would add more financial gains if exported or sold in raw form rather than value addition.

In terms of other minerals, the SMC would focus on and explore minerals of strategic importance. Future plans and activities of the SMC will depend on the final and approved Mineral Development Policy (MDP) in which strategic minerals will be defined.

The mineral development policy which has been with the cabinet since December 2013 and pending for about five years, is now in its final stages.

“We had various consultative meetings with different stakeholders including the private sector. It is now with the international consultants for final review,” Lyonpo said.

The SMC’s terms of reference, which was drafted jointly by DHI, ministries of economic affairs and finance mentions that any strategic minerals identified by the government shall be mined by SMC on the direction and approval of the government in accordance with the applicable laws.

Lyonpo Norbu Wangchuk said that Bhutan is in possession of rare minerals like tungsten and that the country should make best use of it. The problem confronting the mining sector currently, he said is the issue of locking the resources resulting from conflicts within and between the miners and local communities. “Neither the present generation would benefit and nor the future generation could explore the minerals if this continues,” he added.

SMC, he said would avert few individuals benefitting from the mining sector.

However, he outlined some of the challenges the SMC may come across. He said that no research has been conducted for 67 percent of the country’s land. “We don’t know what kind of minerals are present.”

The Chairman of DHI, Dasho Sangay Khandu ensured DHI’s commitment and effort to implement the best practices of the industry, demonstrating transparent allocation of resources, using the cleanest mining technology, and always taking into consideration the environmental impact of the business.

He however urged the government to come up with the mineral development policy at the earliest since laws and policies would ensure smooth functioning of the SMC.

On the “strategic minerals”, he said it is still not clear as to what and which type of minerals fall in the category.

After deliberating the pros and cons of establishing the SMC under either ministry of economic affairs or DHI as parent agency for the SMC, the Cabinet on August 15, took the decision to establish SMC as a subsidiary company under DHI.

By Tshering Dorji

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