PM had asked DHI to look into domestic price of dolomite for local industries

During the Prime Minister, Dr. Lotay Tshering’s interaction with the private sector and media on 31st March 2023, at the Bhutan Chamber of Commerce and Industry (BCCI), the PM stated that he has asked Druk Holding investment (DHI) to look into the matter concerning the domestic price of minerals, especially dolomite which is sold by the State Mining Corporation of Bhutan (SMCL) to industries in the country.

The dolomite (residue) is priced at Nu 1,250 per mt for domestic sale and the same rate is charged for dolomite exported to other countries. Acknowledging that he was not aware of the situation, the PM said he always thought that SMCL sold dolomite to the local industry at a cheaper rate than the export price.

Additionally, he also highlighted the cost of transportation from the place of extraction to India, which should be factored into the pricing of dolomite for local industries and emphasized on the importance of providing minerals to local industries at a reasonable price.

“Similar to this, if someone is operating a straightforward, respectable industry and the mineral required by the industry is present here, providing the mineral to the local industry is not an issue as long as we adhere to the norms,” the PM said. 

Reiterating that he had spoken about it with DHI, the PM said, “And if not, we will have to turn over the captive mine to the local industry so that it can harvest the mine itself.” 

Meanwhile, on December 26, 2022, the multi-sectoral price fixing Committee (MSPFC) set the domestic price of dolomite in Bhutan at Nu 1,250 per metric tonne (MT) for local industries. The MSPFC is responsible for determining the prices of minerals in the country for domestic industries and markets. The committee was constituted on August 18, 2022, but only managed to fix the price in December last year.

The State Mining Corporation Limited (SMCL) has been supplying dolomite to regional enterprises since taking over from Jigme Mining Corporation Limited (JMCL). However, there has been no decrease in price since the takeover, and local powdery businesses have been struggling due to the high cost of the raw material.

Before SMCL took over, the local industries used to purchase dolomite from JMCL for Nu 100 per MT. After SMCL took over, they kept selling dolomite at Nu 1,250 per MT, which local industry owners consider too high for a raw material. There are currently five industries in the country producing dolomite-based products, including Bhutan Crushing Unit in Samtse, Chhundu Powder Plant in Gomtu, and Khenpa Pvt Limited in Phuntsholing, Jigme Industry and Samden Dolomite.

According to local Power Plants in the country, the end product they produce is priced at around Nu 2,250 per MT, which means there is no profit after calculating production costs.

By buying the raw materials from SMCL at Nu 1,250, they are only able to maintain their business without any profit.

The Chhundu Power Plant in Gomtu produces fertilizers for tea gardens from dolomite powder and exports it to India and Bangladesh. They also produce dolomite powder for fish projects, using the dolomite’s calcium to clear the water for the fish.

The local industries were waiting for almost a year or two for the MSPC to fix the domestic price of dolomite, hoping it would be lower than Nu 1,250. However, on December 26, 2022, the Ministry of Economic Affairs (MoEA) now known as Ministry of Industry, Commerce and employment (MOICE) issued a notification stating that the domestic price of minerals had been fixed, with no change in the domestic price of dolomite.

The unofficial price of Nu 1,250 had been made official by the committee.

However, the notification also stated that, the domestic price will be revised again on June 2023.

Meanwhile, when asked why the committee fixed the domestic price of dolomite at Nu 1,250 per MT, rather than lowering it, officials from the Department of Geology and Mines (DGM) stated that the differences in prices between what was supplied earlier and now were due to the quality of dolomite that industries would get.

DGM argues that SMCL supplies the same grade of dolomite that is exported to India, while JMCL supplied only the rejects that were not exported, mainly undersize/crusher dust.

MSPFC consists of representatives from Druk Holding Investment (DHI), the Ministry of Economic Affairs (MoEA), the Ministry of Finance (MoF), and the Bhutan Chamber of Commerce and Industry (BCCI), with the DGM acting as the secretariat to the committee. The committee is responsible for proposing meetings to fix the prices of minerals upon consultation and approval of the Chairperson.

Tshering Pelden from Thimphu