The government is preparing to amend the Mines and Minerals Act to impose fines of up to Rs 10 million on anyone who explores or extracts minerals without obtaining a licence.
The government is moving to amend the Mines and Minerals Act after four decades. The Mines and Minerals Bill formulated to amend and consolidate laws relating to mines and minerals, presented by the Ministry of Industry, Commerce and Supplies in the House of Representatives, will replace the Mines and Minerals Act 1985.
According to Industry Minister Gaurikumari Yadav, the new law will address the scientific, sustainable and systematic utilisation of mines and minerals. The Act will clarify the roles, coordination mechanisms and jurisdictions of the federal, provincial and local governments in accordance with the federal system. It will also make the process of conserving, exploring and extracting minerals more transparent, competitive and accessible.
The bill also proposes special protection and regulation of strategic, defence-related and radioactive minerals, the use of minerals in line with environmental protection principles, and measures to reduce geological hazards.
Provinces to get greater role in mineral exploration
The proposed law provides that the authority to explore mines and minerals will be exercised in accordance with provincial law. Under the existing law, the Nepal government has exclusive authority over all activities related to minerals. Under the new provision, exploration of mines and minerals extending across two or more territories will be carried out with the mutual consent of the concerned provincial governments. In case of a dispute, exploration will be conducted through the Department of Mines and Geology, according to the bill.
However, the authority to extract minerals will remain with the Nepal government. For this purpose, the government may conduct extraction through the department itself or grant a company a licence to carry out mining activities. The bill also states that the Nepal government may, by publishing a notice in the Nepal Gazette, delegate certain mining and mineral extraction-related responsibilities to provincial and local governments. The concerned local governments will be responsible for the conservation of mines and minerals. All authority over activities involving radioactive minerals will remain with the Nepal government.
Special provisions for strategic and defence-related minerals
Under the proposed law, the Nepal government may designate any mineral as strategic or defence-related based on its use, availability and national interest. The government will have the authority to set necessary conditions, impose restrictions and prohibit specific activities at locations where such minerals are found.
The authority to conduct or commission activities involving such minerals will also remain with the Nepal government. Work involving these minerals will have to be carried out through companies fully owned by the Nepal government.
Under the bill, companies seeking to explore or extract mines and minerals must obtain a licence. However, a licence will not be required to collect and use ordinary construction materials such as stone, gravel, sand, soil and slate found on privately owned land for personal use.
Exploration licence periods specified in the Act
The bill proposes to specify the duration of exploration licences in the Act itself. The existing Act does not prescribe a fixed period. Under the proposed law, an exploration licence for major minerals will be valid for three years. The period will be two years for important minerals and one year for ordinary minerals.
The validity of licences issued before the new Act comes into force will also be maintained in accordance with the new provisions. Extraction licences will be valid for a maximum of 30 years. Under the proposed bill, licences for the extraction of very small, small, medium and large-scale mineral deposits will be valid for 10, 15, 20 and 30 years, respectively.
If extraction cannot be completed within the prescribed period, the licence may be extended. The extension periods will be two, three, five and seven years, respectively. Licence holders will be required to begin extraction within two years of obtaining a licence. Mining companies will also have to comply with environmental protection laws. The authorities may suspend mining activities if the prescribed conditions are not met.
Fines increased
No person may explore or extract minerals without obtaining a licence under the Act. Under the proposed bill, anyone who conducts or commissions exploration in violation of the law may be fined up to Rs 500,000. For extraction-related offences, the fine will be based on the nature and quantity of the mineral extracted.
Where the value of the illegally extracted mineral can be determined, the offender will have to pay the assessed value as well as an additional fine equal to that amount. If the value cannot be determined, the fine will range from Rs 2.5 million to Rs 10 million.
Under the existing law, the maximum fine is only Rs 100,000. The new law proposes that, when determining the value of illegally extracted minerals, the amount will be calculated at 50 times the prescribed royalty rate for the relevant mineral. Anyone who conducts or commissions mining activities in violation of prescribed conditions will face a fine ranging from Rs 500,000 to Rs 1 million and imprisonment for five to 10 years.
According to the bill, if a licensed company extracts more minerals than the annual quantity specified in its licence, or conceals the actual quantity extracted and submits a false statement showing a lower quantity, the company may be required to pay the assessed value of the excess or concealed quantity and an equivalent fine. If the value cannot be determined, a fine ranging from Rs 100,000 to Rs 1 million may be imposed.
Under the proposed law, anyone who obstructs or interferes with an inspector in the discharge of official duties may be fined up to Rs 10,000 immediately by the inspector. If extraction is carried out outside the approved mining area, the licensed company may be required to pay the assessed value of the minerals extracted and an equivalent fine. If the value cannot be determined, the company may be fined between Rs 500,000 and Rs 1 million.
Anyone or any organisation involved in the export, extraction, transportation or sale of prohibited minerals may be required by the director general to pay the assessed value and an equivalent fine. If the value cannot be determined, a fine of Rs 200,000 to Rs 500,000 may be imposed, and equipment used in the offence may be confiscated.
For the purpose of determining the value of minerals in such cases, the bill proposes using an amount equivalent to 10 times the prescribed royalty rate for the relevant mineral. In another provision concerning valuation, the amount will be calculated at 15 times the prescribed royalty rate.
A licensed company that fails to comply with prescribed conditions may be fined Rs 500,000. Anyone who obstructs or interferes with mining activities carried out under the Act, or commits any other act in violation of the Act, may be fined up to Rs 200,000. The bill states that fines imposed under this section will be recovered from the concerned individual, organisation or company as government dues.
In the case of minerals falling under the jurisdiction of provincial and local governments, enforcement action and fines will be governed by the laws of the respective province or local government.
