The completion of Phase I study at Khepchishi Graphite Deposit, Haa has narrowed down to deposits at Khepchishi hills, Haa, as the most potential Graphite Deposit in Bhutan. Further, the Department of Geology and Mines (DGM) is all set to move ahead with other studies that will lead to the completion of all studies and assessments by the end of the 13th Five Year Plan (FYP) and probable extraction of the mineral.
Phase I studies by the Department began in Financial Year (FY) 2004-2005, which included the Mineral Market Analysis of Graphite in Bhutan, and the beneficiation prospects, and was carried out to narrow down the scope of study for Phase-II. In the FY 2025-2026, DGM will conduct prefeasibility study (PFS) of graphite deposit, followed by Industrial Site Visits to Refractory Industries and also to Graphite Beneficiation Plants to validate the graphite beneficiation processes and technologies.
Accordingly, approval and directives of the Ministry of Energy and Natural Resources (MoENR) will be sought concerning the way forward and if approved, the DGM will undertake detailed deposit assessment, Final Mine Feasibility Study (FMFS), Financial Modeling, seeking of clearances and finally, lease of mine. If everything goes well, including the approvals and clearances, the studies will be completed in the 13th Five Year Plan (FYP), paving the way for graphite extraction.
Location and deposit overview
According to an official from DGM, Phase-I has narrowed the most potential Graphite Deposit in Bhutan to the deposit at Khepchishi Hill at Chelela, Haa.. The grand total in-situ reserves (Inferred, Proved and Probable category) is 53.74 million MT of Graphite Schist at 12-15% Fixed Carbon (FC). The total in-situ reserves [Proved and Probable category] is 45 million MT at 12-15% FC. “These reserves position Khepchishi as a potentially high-value contributor to Bhutan’s mineral and export sectors.”
Commercial viability
Concerning commercial viability of the mineral, an official from DGM said that in 1989, as commissioned by RGoB, the Austroplan (Austrian Engineering Company Limited) carried out a Detailed Techno-Economic Feasibility Study on Graphite Resources in Bhutan. As per their assessment, the project, under ideal base-case conditions, exhibited a Financial IRR of 9.99% and a Pay Back Period of 8.2 years, and an Economic IRR of 14.74% and a Pay Back Period of 6+ years. This was for a 23 years (3 pre-production + 20 operational) schedule with an initial investment of Nu. 46 million or USD 3.3 million then (USD 8.6 USD or Nu. 290 million today).
“It has been 36 years since that evaluation, during which significant changes have occurred in the socio-economic environment, technological advancements, market and other conditions. Furthermore, many of the assumptions and input parameters applied in the earlier model are no longer valid or may be modified. The prior assessment did not incorporate extensive sensitivity analyses or simulation techniques to address risks and uncertainties,” the official said. He added that in view of these factors, an updated technoeconomic studies and financial model is required to comprehensively re-evaluate the project’s feasibility.
Concerning identified and probable markets, the official underlined that based on the quality (and hence the value) of graphite, the end product will be a Refractory Grade (2&3) concentrate. “And considering the location of the graphite deposit and the beneficiation plant, the target market is limited by the logistic costs. Therefore, the initial Mineral Market Analysis indicates a feasible market in nearby Indian states such as West Bengal,” he added.
He further stated that the export quantity will mainly be dictated by two factors – the production (mine & processing plant which will be determined during the FMFS) and demand. “Therefore, the annual quantity of minerals exported can be determined only after completion of all the above studies.”
Concerning domestic market, the official said that as there is currently no domestic demand for this grade of graphite, any emerging domestic needs will be prioritized in alignment with the national mineral policy. Production volumes and export strategies will be finalized after technical and financial studies are completed.
Environmental and community considerations
The Chelela site, a popular tourist and cultural destination, presents unique challenges. However, there are mechanisms to address this, such as the environmental management plans, which will address waste rock, tailings, beneficiation residues, potential acid mine drainage, and water contamination. Similarly, social impact assessments will guide future approvals, ensuring community engagement and minimizing ecological disruption.
Comprehensive environmental and social clearances are critical before any large-scale mining operations commence.
Stakeholders and study execution
While DGM leads the comprehensive studies, the State Mining Corporation Limited (SMCL) previously conducted deposit reassessment, sample analyses, and beneficiation tests in India. SMCL’s involvement was largely focused on deposit revalidation. DGM continues to coordinate all studies to ensure a holistic evaluation of technical, financial, and environmental factors.
The way ahead
If feasibility studies confirm the project’s viability, the government intends to lease the mine to qualified entities, potentially including private operators, subject to regulatory provisions. Under the Mines and Minerals Management Regulations 2022, graphite mining is currently restricted to state entities, with the Ministry deciding on appropriate operators.
Successful development of the Khepchishi deposit would enhance Bhutan’s mineral industry, boost export revenues and facilitate technological and industrial advancements.
The Khepchishi Graphite Project represents a strategic initiative under Bhutan’s 13th FYP, reflecting the country’s efforts to diversify its economy and harness natural resources sustainably. If all phases proceed smoothly, the deposit could become a cornerstone of Bhutan’s mineral exports and an important driver of industrial and economic growth.
Meanwhile, stakeholders and the public are encouraged to follow official updates from the DGM for developments on this high-potential project.
Sangay Rabten from Thimphu
