The Mines and Minerals Bill deadlock broken

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As SMCL gets lease of 15 years to operate mines, the question remains if it will be able to fulfill its aspirations
One of the most remembered sessions of the current parliament will be the sixth session, where the Mines and Minerals Bill 2020 was discussed leading to a deadlock between the two houses of the parliament. The final nail on the Bill was submission made by National Assembly member Kinley Wangchuk, Chairperson of the Joint Committee for the Bill, recommending that the Bill be deferred in the Joint Sitting and the Speaker doing so. However, this was not welcomed by members of the National Council and certain members of the Opposition party. Reasons such as the Speaker cutting short the discussion after two hours when three days had been allotted for the Bill and the application and use of section 59 A (2) of the Legislative Rules of Procedure used by the Speaker to defer the Bill is not in keeping with the Constitution were made. 
But nothing changed until April 18, 2022, where a Memorandum of Understanding (MoU) on the “Long term lease of Khothakpa Gypsum Mine and the Chunaikhola Dolomite Mine” was signed by the Secretary of the Ministry of Economic Affairs, Karma Tshering and Dasho Karma Yezer Raydi, Chief Executive Officer, Druk Holding and Investments Limited. However, what remains to be seen is if operation of the mines by the State Mining Corporation Limited (SMCL) will result in equal wealth distribution, benefits to the communities and others. Additionally, there are other concerns expressed by people.  
The MoU concerns the lease of Khothakpa Gypsum Mine located at Khothakpa under Shumar Gewog, Pemagatshel Dzongkhag, and the Chunaikhola Dolomite Mine located at Nyoenpaling under Phuntshopelri Gewog, Samtse Dzongkhag which are currently being operated on an interim lease by the State Mining Corporation Limited (SMCL). The Mining Lease Agreement will be signed between the Department of Geology and Mines and the SMCL leasing these mines for 15 years lease period.
The decision to lease these mines to SMCL is based on Section 10 of the Mines and Minerals Management Act of Bhutan 1995 and Sections 27(1) and 28 of the Mines and Minerals Management Regulations 2022 (MMMR 2022). Section 10 of the Mines and Minerals Management Act of Bhutan 1995 says: “The Head of Ministry shall be the sole authority to lease mineral deposits and he shall delegate all necessary powers to the Head of Division.”
Section 27(1) of the Mines and Minerals Management Regulations 2022 (MMMR 2022) says: “The Ministry shall allocate proven mineral reserve: (1) directly to state-owned mining agency..”.  And Section 28 of the MMMR 2022 says: “Direct allocation of proven mineral reserve to state owned mining agency shall be based on: (1) wider economic benefits; (2) high potential for export in primary form; (3) potential for generating substantial revenue; (4) reliable and affordable supply of minerals and mineral products in the country; or (5) sustainable development of mineral resources.” 
According to the MoU, during the lease period, the SMCL shall pay License Fees of Nu. 3 billion (Nu. 200 million per annum) for Chunaikhola Dolomite Mine and Nu. 1.125 billion (Nu. 75.00 million per annum) for Khothakpa Gypsum Mine to the Royal Government. The MoU is expected to promote socially responsible and environment friendly sustainable mining while contributing huge revenue to the State. Further, the MoU has the provision for other areas of cooperation for future development of the minerals and the sector with clear roles and responsibilities of the parties.
However, what remains to be seen is if SMCL taking over will have what Section 28 of the MMMR 2022 says: “wider economic benefits; high potential for export in primary form; potential for generating substantial revenue; reliable and affordable supply of minerals and mineral products in the country; or sustainable development of mineral resources.” 
A private entrepreneur who did not want to be named said concerns of local residents which typically include perceived or real impact of mining enterprises on the environment, unfair distribution of profits from mining and exploration activities, insufficient contributions to local government budgets and lack of transparency are issues that could prop up. He said questions if mining of some areas is really necessary or not should be done. “Is it necessary for the economy? What short-term and long-term benefits will be received by the central and local governments? What possible dangers and threats to public health and living conditions can arise as a result of the mining activity? These are questions to be asked,” he said.  
Saying people are now more aware, he said the government should consider what the community will forever lose, in terms of “components, elements, systems of the environment,” and what will undergo degradation. “I think the government must have carefully studied the balance between the economic benefits from mining to the state and population and negative environmental impacts,” he said. 
A resident from Samtse also said it does not matter much to them as far as the government ensures that wealth is distributed equally. “Fair distribution of the benefits from mining and benefits to communities around are important. Everyone knows the hazards of mining and so the government should come with specific activities for remediation, rehabilitation and restoration of land areas and other natural features damaged in the course of mining,” he said, adding that with people becoming more aware, there could be conflicts. “Distribution of mineral resources revenues should be transparent; local population appropriately compensated for environmental degradation, decline of biodiversity and deterioration of people’s health,” he said. 
The Mines and Minerals Bill of Bhutan 2020 was introduced and passed by the National Assembly in its 2nd and 3rd Session of the Third Parliament and presented to the National Council for deliberation during its 26th Session. However, the National Assembly during its re-deliberation on the Bill could not incorporate the amendments of the National Council. The Joint Committee on the Mines and Minerals Bill of Bhutan was then formed in line with the Legislative Rules of Procedure 2017 to review the disputed clauses of the Bill.
“After discussing it for so many years, nobody will be satisfied with the decision today. Even I feel sad that we couldn’t pass the bill during my tenure. It would have been fulfilling had we deliberated on the bill as per the Constitution and for the benefit of the country and people,” the National Council’s Chairperson, Tashi Dorji, had said after the Speaker deferred the Bill. 
The NC had said mining rights should go to state owned enterprises and said its decisions are based on the premise to uphold the Constitution and ensure that wealth from the mining sector benefits the people of Bhutan. The upper house cited Article 1.12 of the Constitution: “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.” Another provision, Section 9.7 of the Constitution: “The State shall endeavour to develop and execute policies to minimize inequalities of income, concentration of wealth, and promote equitable distribution of public facilities among individuals and people living in different parts of the Kingdom,” was also highlighted.
Differences in profit and revenue generated in the business was also reflected. After SMCL took over, dolomite export price was Nu 1150/metric ton, while private mining companies charged Nu 520 per metric ton. Further, the profit after tax, earned by SMCL after taking over Druk Satair was Nu 802/metric ton, while it was just 398/metric ton when private miners handled the mine. It was also presented that contribution in the next 15 years if SOEs handled the mines would be Nu 40,000 million. On the other hand private sectors would contribute Nu 16,000 million (pocketing Nu 24,000 m in 15 years – about Nu 1618m  per year – which is almost equal to amount generated by Nikachu and Kurichu in one year. Another argument was that tax by SMCL is given twice – 30% by SMCL as CIT and 30 % by DHI as CIT.