Mineral Development Policy 2017 | ESCAP Policy Documents Managment

Meta Data

Draft:

Yes

Revision of previous policy?:

Draft Year:

2013

Effective Start Year:

2017

Scope:

National

Document Type:

Overarching Policy

Economic Sector:

Energy

Energy Types:

Coal

Issued by:

Royal Government of Bhutan

Source:

Gross National Happiness Commission, Royal Government of Bhutan

File:

Mineral Development Policy 2017

Overall Summary:

The policy's rationale is to balance the economic development achievable through mineral resources and their limited social and environmental sustainability. It is aimed towards the creation of a vibrant mineral sector that contributes towards the achievement of the Gross National Happiness. The objectives are as follows: The Mineral Development Policy shall have the following objectives:  To develop the scarce mineral resources for optimum value addition so that maximum benefit accrues to the nation;  To allow selective and cautious development of minerals for socio-economic development while ensuring environmental sustainability and inter-generational equity in the larger interest of the country;  To ensure the availability of construction materials at affordable prices to all the citizens;  To increasingly contribute to the national economic development by enhancing generation of revenue and employment;  To promote human resource development and ensure that mineral development is carried out by technically qualified professionals;  To promote investment in the mineral sector by technically and financially competent entities;  To develop an integrated mineral information system in the country;  To ensure effective regulation, administration, management and monitoring of the mineral sector.

Environment

Energy environmental priorities:

Facilitate efficient, responsible and sustainable development of the mineral resources that contributes to the socio-economic development of the nation.---Objectives: [...] To allow selective and cautious development of minerals for socio-economic development while ensuring environmental sustainability and inter-generational equity in the larger interest of the country; ---For minerals (such as talc and coal) which occur in the form of erratic deposits (i.e. stringers, pockets, thin lenses and bands) and which are geologically difficult to be proven, the DGM shall identify localised areas and study the feasibility of operating such deposits in a environmentally sound, economically feasible and socially acceptable manner.

Land use change for energy production purposes:

All mining companies will be required to contribute to a community development fund to be used specifically for drinking water schemes, water source protection, social forestry schemes and renovation of religious sites belonging to the community and other schemes as may be prioritized by the community.

Energy-water nexus:

Pricing

Fossil fuel subsidies:

All mining companies and firms shall be eligible for the general, employment and foreign exchange incentives as detailed in the EDP 2010. The EDP states that the Mineral Development Policy shall provide sector specific incentives for the mining sector. i. On certification by DGM, MoEA and NEC, companies that have invested in equipments and machinery and/or capacity building programmes that comply beyond prevailing environmental standards shall be allowed full tax credits. The credit is deductible to a maximum of 30% of companies’ tax payable in a given year and balance can be carried forward for use in future years. ii. All capital goods and spares that reduce the need for expatriate labour and other mining equipments that improves efficiency shall be exempt from customs duty and sales tax. iii. All mining machineries and equipments shall be allowed accelerated depreciation at double the prevailing rates.

Energy Supply and Infrastructure

Infrastructure development priorities:

Facilitate efficient, responsible and sustainable development of the mineral resources that contributes to the socio-economic development of the nation.---For minerals (such as talc and coal) which occur in the form of erratic deposits (i.e. stringers, pockets, thin lenses and bands) and which are geologically difficult to be proven, the DGM shall identify localised areas and study the feasibility of operating such deposits in a environmentally sound, economically feasible and socially acceptable manner.

Trade

Advance rulings:

A Minimum value addition of 40% and Change in Tariff Classification at 6 digit level of the Harmonized Commodity Description and Coding System on a mineral product shall be necessary to qualify for export till detailed value addition criteria is developed.[...].

Investment

Energy sector investment priorities:

To promote investment in the mineral sector by technically and financially competent entities;

Tax and duty exemptions for energy equipment:

Investment climate development:

To promote investment in the mineral sector by technically and financially competent entities;---Foreign direct investment (FDI) in the mineral development sector shall be as per the Foreign Direct Investment (FDI) Policy, 2010 and the rules and regulations thereunder. In the interest of promoting cleaner and greener industries, foreign investor/companies that possess international environmental certification standards such as ISO 14000 series or equivalent shall be encouraged through provision of incentives such as preference during the allocation process.

Bidding and Tendering:

For minerals (such as talc and coal) which occur in the form of erratic deposits (i.e. stringers, pockets, thin lenses and bands) and which are geologically difficult to be proven,[...]The allocation of mining rights for such deposits shall also follow the bidding process [...].

Governance

Energy management principles:

To ensure effective regulation, administration, management and monitoring of the mineral sector.--- the RGoB shall ensure community wellbeing [...]. Listed mining companies while floating their shares shall ensure that at least 10% of the shares are allocated to the affected community where the mines/quarries are located.

Energy institutional structures:

in order to manage the mineral resources of the country in an effective manner, a Mineral Development Authority shall be established as an autonomous body, while the Department of Geology & Mines under the Ministry of Economic Affairs shall remain as an apex body for the geo-science and mining sectors.

Statistics collection and management:

To develop an integrated mineral information system in the country;

Full Document Text

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Mineral Development Policy

May 2017

Royal Government of Bhutan

TABLE OF CONTENTS

Definitions............................................................................................. ix

1. Rationale......................................................................................... 1

2. Institutional Arrangements.......................................................... 2

2.1. The Ministry............................................................................. 2

2.2. The MRA................................................................................. 2

3. Leasing and Mineral Rights.......................................................... 3

3.1. Classification of Minerals........................................................ 3

3.2. Granting of Prospecting and Exploration Permit

and Mining Lease..................................................................... 3

3.3. Standards of Prospecting and Exploration permits.................. 5

3.4. Standards of Mining Lease...................................................... 6

3.5. Standards of Surface Collection............................................... 6

3.6. Optimization of Minerals......................................................... 7

3.7. Value Addition......................................................................... 7

3.8. Broad Based Ownership.......................................................... 7

3.9. Transparency and Information Sharing.................................... 8

3.10. Professional Capacity............................................................. 8

3.11. Occupational Health and Safety............................................. 8

4. Environmental Stewardship......................................................... 8

4.1. Environmental Protection and Regulatory Regime................. 9

4.2. Environmental Studies, Assessments, Management

and Mitigation Plans................................................................ 9

4.3. Environmental Permits and Approvals.................................. 10

4.4. Mine Closure and Reclamation.............................................. 10

4.5. Maintenance of Roads............................................................ 11

5. Social Risk Management and Mitigation.................................. 11

5.1. Social Participation and Risk Management........................... 11

5.2. Social Risk Studies, Assessment, Management

and Mitigation Plans.............................................................. 12

5.3. Mine Closure and Post Mining Adaption.............................. 12

vi | Mineral Development Policy, 2017

6. Socio-economic Benefits and Benefit Sharing........................... 12

6.1. National Level Benefits.......................................................... 13

6.2. Local Level Benefits.............................................................. 13

7. Amendments................................................................................. 14

8. Interpretation of the Policy......................................................... 14

Mineral Development Policy, 2017 | vii

ACRONYMS

AETR Average Effective Tax Rate

CDA Community Development Agreement

CDF Community Development Fund

DGM Department of Geology and Mines

DRC Department of Revenue and Customs

EMMP Environment Management and Mitigation Plan

ESRMMP Environment and Social Risk Management and Mitigation

Plan

FDI Foreign Direct Investment

MCRP Mine Closure and Reclamation Plan

MMMA Mines and Minerals Management Act, 1995

MMMR Mines and Minerals Management Regulations, 2002

MoLHR Ministry of Labour and Human Resources

MP Mine Plan

MRA Mining Regulatory Authority

MRF Mine Reclamation Fund

NSB National Statistic Bureau

RGoB Royal Government of Bhutan

SRMMP Social Risk Management and Mitigation Plan

Mineral Development Policy, 2017 | ix

DEFINITIONS

1. “Average Effective Tax Rate” or “AETR” is the Government

Revenues received from an investment divided by the Net Cash

Flow over the life of investment. The AETR may be calculated

undiscounted or on a Net Present Value basis with government

revenues and cash flow discounted at the government’s discount

rate.

2. “Captive mine” means a mine leased to the owner/promoter of a

processing industry for the sole purpose of supplying raw material

to that industry.

3. “Community Development Agreement” or “CDA” means an

agreement signed by duly appointed representatives of the affected

community, the MRA and the mining operator to formalize any

understandings regarding benefits for the affected communities.

4. “Community Development Fund” or “CDF” means a fund

contributed by mining leaseholders to finance the implementation

of the activities agreed in the Community Development Agreement

to support affected community development.

5. “Intergenerational equity” in terms of minerals, being exhaustible

in nature, means to prescribe various measures to invest the mineral

resources cautiously and in productive capacity bequeathing future

generation with direct and indirect benefits.

6. “Leaseholder” means the mining leaseholder.

7. “Mine” means an opening or excavation in the ground for the

purpose of extracting ore, coal, precious stones, etc., encapsulating

quarry, which shall literally mean extraction of construction

materials.

8. “Mineral” means any substance occurring naturally in or on the

earth and having formed by or subject to a geological process and

which can be obtained from the earth by digging, drilling, dredging,

quarrying or other mining operations.

x | Mineral Development Policy, 2017

9. “Mineral Development” means any activity related to the

exploration for or winning and working of minerals and construction

materials, including tipping of spoil and ancillary operations such

as the use of processing plant.

10. “Mineral Fiscal Regime” means all the fiscal instruments that

apply to the mining sector.

11. “Mining sector” includes the mining and processing of minerals

and the quarrying of construction materials.

12. “Ministry” means the Ministry of Economic Affairs

13. “Progressive fiscal instrument” means a rate of return tax or an

excess profits tax or a royalty with a variable rate.

14. “Reclamation” means removal of any unwanted structures and

equipments used during the operation of the mine and stabilization

of dumps or impoundments and restoration of the surface of the

lease area to natural or economically usable state in line with the

final MCRP.

15. “The Policy” means the Mineral Development Policy.

16. “Value addition” means products of mineral beneficiation and

processing covering the whole range of processes from basic

ore dressing, such as crushing and screening, through to the

manufacturing of semi-final/final consumer goods or chemically

altered products.

Mineral Development Policy, 2017 | 1

1. Rationale

The objective of the policy is to maximize wealth creation in the Bhutanese

economy which also entails full employment. The Policy shall contribute

to the promotion, development and growth potential of the businesses as

well as ensure sustainability and welfare for the people. Since minerals

form the basis for industrialization and economic diversification,

and also are necessary for the development of infrastructure and new

industrial products, the mining sector has been categorized as one of the

five jewels of the country’s economy. Profitable mining businesses can

generate new economic growth and provide positive local, regional and

national benefits.

Geological mapping and mineral exploration is relatively new and recent

in the country. As a result, there is potential to discover economic mineral

deposits and make the country an attractive place for mineral industry.

For the industry to grow and become important there has to be a

targeted long-term focus on knowledge, skills and expertise, innovation,

and technology uptake. The Policy envisages development of an

environmentally friendly and socially responsible mineral industry that

contributes to mutually beneficial co-existence with local communities

and other industries in pursuit of the overall development philosophy of

the country, the GNH. The Policy will be the basis for responsible and

growth oriented mineral industry.

Vision

“A profitable, sustainable, scientific, environmentally friendly, socially

responsible mineral industry with strong value creation and growth”

Mission

To be among the most environment friendly mineral industry through

scientific mineral development and in consonance with national social and

economic policies while seeking innovative and long-term technological

solutions for a forward looking industry.

2 | Mineral Development Policy, 2017

Objectives

i. A profitable mineral industry with strong value-creation and growth.

ii. An environmentally friendly and socially responsible mineral

industry.

iii. Promote intergenerational equity through scaling up the global

value chain.

iv. Enhance mapping of mineral deposits, access to mineral information

and better resource planning.

v. Promote institutional development of mineral agencies.

vi. Promote broad based ownership of mineral resources.

vii. Ensure transparency and accountability in administrative procedures

at all levels.

viii. Ensure availability of construction materials in the country.

2. Institutional Arrangements

There shall be by law, clear delineation of policy and regulatory functions

to enable independence and autonomy of functions and avoidance of

conflict of interest between promotional and regulatory roles. The MRA

shall be established as an independent agency to regulate the mines.

2.1. The Ministry

2.1.1 The Ministry shall be responsible:

(1) for all policy and promotional functions related to

mining;

(2) to issue and administer permits for prospecting and

exploration;

(3) to assess and decide on the lease of mines; and

(4) to propose and periodically revise, the royalty and

mineral rent and establish the applicable fees and

charges.

2.2. The MRA

2.2.1. The MRA shall be responsible:

(1) to lease and regulate all mining and related activities;

(2) to levy and collect royalty, mineral rent, surface rent,

fees and applicable charges;

Mineral Development Policy, 2017 | 3

(3) for oversight and management of MRF and in ensuring

mine reclamation; and

(4) to issue and administer permits for surface collection of

minerals, sand and stones.

3. Leasing and Mineral Rights

3.1. Classification of Minerals:

For the purpose of granting of mineral rights, minerals shall be

classified as follows:

3.1.1. Strategic Minerals: Strategic minerals shall be those minerals

that have wider implications on the economy in terms of

having any one of the following characteristics:

(1) scarce and essential for domestic industries; or

(2) rare and high value minerals, and those minerals with

security implication.

The Ministry shall review and update the list of strategic

minerals periodically based on industries that exist as well as

the potential to develop other manufacturing capabilities and

define minerals required for these industries.

3.1.2. Industrial Minerals: Industrial minerals shall be those

minerals used as raw materials in the mineral processing

industries.

3.1.3. Construction Materials: Construction materials shall mean

sand, stones, gravel and low-grade minerals used for building

and construction purposes.

3.2. Granting of Prospecting and Exploration Permit and Mining

Lease

3.2.1. Any Bhutanese national fulfilling the required criteria shall

be eligible to obtain prospecting and exploration permit and

mining lease. The required technical and financial eligibility

criteria shall be set in accordance with the size and type of

mineral deposits and mines, and the activity.

4 | Mineral Development Policy, 2017

3.2.2. The grant of prospecting and exploration permits shall be

governed by establishing adequate provisions in the law.

3.2.3. The lease of mines to FDI companies shall be subject to

the fulfillment of the requirements under the FDI policy, its

regulations and other relevant Acts and regulations and must

be for a mineral processing industry.

3.2.4. Notwithstanding section 3.1.2 on Industrial Mineral of

this Policy, allocation of all strategic minerals shall be the

prerogative of the RGoB.

3.2.5. All mining rights of mineral deposits proven by DGM shall

be allocated based on allocation framework developed by the

Ministry.

3.2.6. Priority allocation of mines shall be as captive to the

manufacturing industries. The captive mines must solely be

used for that industry until it appears otherwise by quality of

the mineral.

3.2.7. The lease and permits for mineral development shall be of

the following category:

(1) Prospecting Permit: The permit provides right to

physically search for the proposed minerals, fossils,

precious metals or mineral specimens with use of

handheld tools only.

(2) Exploration Permit: The permit provides right to explore

for the proposed minerals within the permitted area to

determine the location, extent and socio-economic

viability of the mineral deposit for exploitation.

(3) Mining Lease: The lease provides right to extract and

process the intended minerals and or construction

materials from within the leased area.

(4) Collection Permit: The permit provides right for surface

collection of proposed sand, stones or minerals from the

permitted area.

Mineral Development Policy, 2017 | 5

3.3. Standards of Prospecting and Exploration permits

3.3.1. A prospecting permit holder shall have the priority right

to apply for exploration permit of the permissible mineral

discovered within the prospecting area. However, this right

shall be exercised within a year from the date of completion

of prospecting and subject to submission of prospecting

report to the department.

3.3.2. An exploration permit holder shall have the priority right

to apply for mining of the permissible mineral explored.

However, this right shall be exercised within five years

from the date of completion of exploration and subject to

submission of exploration report to the department and their

intention to take it further.

3.3.3. The exploration permit holder shall submit minimum annual

expenditure incurred in exploration activities.

3.3.4. To avoid speculation and land banking, permits obtained for

prospecting and exploration shall be used for the purpose

intended, if not the same shall be forfeited.

3.3.5. Accidental discovery of non-strategic minerals beside the

intended minerals may be permitted for further exploration

subject to approval of the Ministry.

3.3.6. Accidental discovery of strategic minerals shall be reported

to the Ministry. Under such cases, appropriate compensation

schemes or a mechanism shall be devised for collaborative

development of the deposits.

3.3.7. Accidental discovery of fossil specimens and gemstones

shall be reported to the Ministry. Appropriate compensation

shall be devised to reward the finding.

6 | Mineral Development Policy, 2017

3.4. Standards of Mining Lease

3.4.1. All clearances obtained, except for the environmental

clearance, shall be for the life of the mine.

3.4.2. The lease tenure shall be issued for the expected economic

life of the mine up to a maximum of thirty years.

3.4.3. Lease renewals shall be based on past performance and

compliance with the requirements of the mining law and

bylaws.

3.4.4. A lease can only be transferred or sold to other party with

prior approval of the competent authority and after payment

of applicable fees.

3.4.5. Subject to meeting the terms and conditions for the lease

renewal, the lease may be renewed with the new lease tenure

determined by the expected economic life of the mine up to

a maximum of thirty years.

3.4.6. A mining area may be extended if additional feasible mineral

reserves are identified which is contiguous to the approved

boundary.

3.4.7. The lease executed shall apply to mining of the stated

minerals only. However, if there is occurrence of some other

minerals of value, the principle of optimization of minerals

shall be followed. Further, such occurrences shall be notified

to Ministry for approval of the mining right and imposition

of royalty.

3.4.8. Noncompliance shall be subject to progressive penalties, and

forfeiture shall be the ultimate resort.

3.5. Standards of Surface Collection

3.5.1. Surface collection shall be confined to broken boulders and

not include extraction of insitu rocks.

Mineral Development Policy, 2017 | 7

3.5.2. The permit for surface collection shall be subject to feasibility

and Forestry and Environmental clearances.

3.6. Optimization of Minerals

3.6.1. The MRA may explore for export of low grade minerals in

primary form, including mineral rejects, through canalization

so as to maximize the benefit.

3.6.2. The MRA shall promote optimization through improvement

in mining methods, beneficiation, blending and utilization

of low grade ore and rejects and recovery of associated

minerals.

3.7. Value Addition

3.7.1. A resource-based industrialization shall be encouraged for

all viable and potential minerals.

3.7.2. Notwithstanding section 3.7.1, the export of minerals in

primary form shall be discouraged. However, those minerals

which cannot be used as a raw material for an industry or

supply to other industries in the country as additive may be

permitted for export.

3.7.3. The RGoB shall facilitate and encourage development of

mineral value chain to promote economic growth and achieve

intergenerational equity.

3.7.4. The RGoB shall levy lower royalty for in-country value

addition and use.

3.8. Broad Based Ownership

3.8.1. The RGoB shall encourage and promote broad based

ownership in mining through enabling measures. The

Ministry shall adopt a framework for mining companies that

need to have broad based ownership.

8 | Mineral Development Policy, 2017

3.9. Transparency and Information Sharing

3.9.1. The Ministry and MRA shall provide full disclosure barring

national security considerations in regard to decisions made

for execution of leases, agreements and contracts in their

respective area.

3.9.2. The Ministry and MRA shall be responsible for maintaining

records and disseminating information pertaining to mineral

and mining sector in their respective area.

3.9.3. The NSB, MoLHR and DRC shall report mining statistical

information in their publications.

3.10. Professional Capacity

3.10.1. The mines shall be operated with best possible methods

and leaseholders shall recruit professionals and technically

competent mining personals to manage the mines

proficiently.

3.10.2. The RGoB shall allow employment of expatriate

professionals wherever local capacity is not available.

3.10.3. Leaseholders shall provide trainings to build the skills of

local workers.

3.11. Occupational Health and Safety

3.11.1. Leaseholders shall comply with occupational health & safety

standards for different types of mines as per prevailing laws

and bylaws.

4. Environmental Stewardship

The RGoB shall strengthen the enforcement of mining and environmental

laws to give due consideration to environmental integrity guided by the

principles of sustainable development and intergenerational equity.

Mineral Development Policy, 2017 | 9

4.1. Environmental Protection and Regulatory Regime

4.1.1. The competent agencies shall ensure regular supervision and

management of all mines by qualified professionals.

4.1.2. Compliance monitoring shall be supported by appropriate

progressive penalties.

4.1.3. The affected communities shall be informed about the

management and mitigation of environmental risks

throughout the mining life cycle.

4.1.4. The competent agencies shall collaborate with research

institutions both within the country and abroad to facilitate

transfer of knowledge, skills and technology in the field of

environment, protection and regulatory regime.

4.2. Environmental Studies, Assessments, Management and

Mitigation Plans

4.2.1. The leaseholders shall adopt a risk-based approach in

preparation and submission of environmental studies,

assessments and management and mitigation plans.

4.2.2. A professionally designed MP and EMMP or ESRMMP

shall be prerequisites for leasing of a mine.

4.2.3. Underground mines or other mines with potential high risk

features shall be required to prepare an Emergency Plan and

Hazard Preparedness Response Plan.

4.2.4. Different stages of mineral development, starting from

exploration, mining and production to mine closure

and reclamation shall be based on sound, scientific and

engineering principles. Mine allocation shall take into

account the environmental carrying capacity of each mining

area and accordingly avoid unnecessary proliferation of

mines.

10 | Mineral Development Policy, 2017

4.3. Environmental Permits and Approvals

4.3.1. Environmental clearances for exploration, mining and

surface collection permits shall be obtained as per the

environmental laws of the country.

4.3.2. The environmental and related permit processes for mining

shall be streamlined to enhance service delivery.

4.4. Mine Closure and Reclamation

4.4.1. The final MCRP shall be prepared prior to the expiry of the

mining lease in consultation with the affected community.

4.4.2. A MRF shall be collected from the leaseholder to fund the

MCRP.

4.4.3. Effective procedures and instruments shall be strengthened

to ensure that sufficient MRF is available for reclamation

prior to mine closure or in the event the mine is abandoned

during the operating period.

4.4.4. The mine reclamation shall commence immediately after

cessation of the mine operations to ensure post mine

reclamation.

4.4.5. Progressive reclamation carried out by leaseholders shall be

recognized by reimbursing the costs from the MRF.

4.4.6. Any balance fund in the MRF after reclamation of the mine

shall be refunded to the leaseholder.

4.4.7. Post-mining reclamation of all auctioned mines shall

be carried out by the MRA on exhaustion of the mineral

reserve and abandonment of the mine. The MRF collected

from such mines shall not be refunded.

4.4.8. The MRF collected from the mines, except for section 4.4.7,

shall not be built into the final cost of the mineral. Only that

Mineral Development Policy, 2017 | 11

part of the fund used for reclamation of the mine shall be tax

deductable.

4.5. Maintenance of Roads

4.5.1. The leaseholder shall be responsible for the maintenance

of existing roads being used, on a cost sharing basis. The

cost shall be determined by the MRA in consultation with

concerned agencies and the leaseholder.

5. Social Risk Management and Mitigation

The leaseholders shall adopt measures to manage and mitigate adverse

impacts of mining on the affected communities and minimize social

risks.

5.1. Social Participation and Risk Management

5.1.1. Public consultations shall be conducted as per the Public

Consultation Guidelines. Public consultation shall focus

only on the affects of the proposed mining and related

activity to the public and their property.

5.1.2. The operation of mines shall take place in a manner that

gives due consideration to the health and safety concerns of

the affected communities.

5.1.3. The affected communities shall be informed about the

management and mitigation of potential social risks

throughout the mining lifecycle.

5.1.4. The leaseholder shall identify and rectify all damages made

to the available local infrastructure and services due to their

mining operation.

5.1.5. Redressal mechanisms shall be instituted at the MRA and

the Ministry hierarchically to address grievances of the

affected communities and resolve disputes.

12 | Mineral Development Policy, 2017

5.1.6. The initial social mitigation protection provided to the

original owners or users of land before mining started shall

not be extended to new settlers and users of previously

unoccupied or unused land near to the mine once the mine

is fully operational.

5.1.7. Mining proposals and related activities shall not be

obstructed for personal gains above and beyond the benefits

being made to the community.

5.2. Social Risk Studies, Assessment, Management and Mitigation

Plans

5.2.1. The leaseholders shall adopt a risk-based approach in

preparation and submission of social studies, assessments,

and management and mitigation plans.

5.2.2. An acceptable SRMMP or ESRMMP shall be prerequisites

for leasing of a mine.

5.3. Mine Closure and Post Mining Adaption

5.3.1. Social risk mitigation regarding mine closure and the post

mining adaptation of the community with social and socioeconomic

aspects shall be included in the MCRP. This shall

be carried out in order to inform the community and the

local government of the potential socio-economic impacts

of mine closure and to enable the community and local

government to prepare measures to address them.

6. Socio-economic Benefits and Benefit Sharing

The principles of broad based ownership shall also be promoted through

benefit sharing mechanisms. In this regard, the affected communities

shall be compensated through benefit sharing for having been negatively

affected by mining activities, if any, which shall include the original

inhabitants of the community to the extent possible as may be determined

by the MRA.

Mineral Development Policy, 2017 | 13

6.1. National Level Benefits

The mining sector offers potential national level benefits such as

raw materials for industries, construction materials, employment

opportunities and enhanced government revenues.

6.1.1. Towards optimizing the national level benefits, the RGoB

shall:

(1) institute a mineral fiscal regime, a progressive fiscal

instrument that provides a fair share of the mining

benefits to the nation and where the AETR is fair to

both the investor and the State;

(2) promote value creation by the mineral industry within

the country to enhance export earnings and to generate

employment opportunities;

(3) secure supply of primary raw materials for in-country

use with due consideration to Bhutan’s geological

position;

(4) develop ability to compete in export markets in

profitable niche value added products;

(5) develop and strengthen mining regions into innovative

and attractive environment for investments and living;

and

(6) strengthen mining sector by fostering cross-sector

knowledge, technologies, expertise and services.

6.2. Local Level Benefits

Mining can also bring substantial benefits at the local level which

includes direct and indirect employment and income, development

of local businesses, infrastructure, and improved health and

education services. Towards optimizing the local level benefits, the

following shall be implemented.

6.2.1. The leaseholders shall provide first preference for

employment opportunities and priority for procurement

of goods and services to the businesses owned by local

communities.

6.2.2. A CDA shall be formulated outlining any benefits for the

affected communities and shall be signed between the

representative of the affected community and the MRA.

14 | Mineral Development Policy, 2017

6.2.3. The MRA in consultation with the local government shall

determine appropriate benefits at local level.

6.2.4. The CDA may be revised after every five years.

6.2.5. The affected communities shall have access to any social

infrastructure provided by the mine and, where feasible,

access to other infrastructures such as road or water supply.

6.2.6. A CDF shall be created to fund activities within CDA.

For incorporated mining companies, the CSR contribution

requirement by the Companies Act shall form part of the

CDF.

7. Amendments

The RGoB shall review this policy every five years. The RGoB shall

review and amend the MMMA 1995 and the MMMR 2002 to strengthen

the management of mineral resources in line with the Policy.

8. Interpretation of the Policy

In the event of conflict of interpretation, the Ministry shall be the

authority to interpret various provisions of the Policy which shall be final

and binding.

Ministry of Economic Affairs

Thimphu : Bhutan

Website: www.moea.gov.bt