Summary
Reviewed editorially.
- The government is preparing to amend the Mining and Mineral Resources Act to impose penalties up to NPR 10 million for mineral extraction without permits.
- The new bill, submitted by the Ministry of Industry, Commerce and Supplies, will replace the Mining and Mineral Resources Act of 1985.
- The bill aims to clearly define the rights of federal, provincial, and local governments under the federal system and regulate mineral exploration and extraction efficiently.
25th Saun, Kathmandu – The government is preparing to amend the Mining and Mineral Resources Act to include provisions imposing fines of up to NPR 10 million for mineral exploration or extraction done without the required permit.
This amendment is the first in four decades. The Ministry of Industry, Commerce and Supplies has presented a bill to the House of Representatives to amend and integrate mining-related laws, which will replace the Mining and Mineral Resources Act, 1985.
According to Minister of Industry Gaurikumar Yadav, the new law will ensure the scientific, sustainable, and systematic use of mining and mineral resources.
The act will clearly delineate the roles, coordination, and authorities of federal, provincial, and local governments in accordance with the federal system. It will promote transparent, competitive, and efficient processes for mineral conservation, exploration, and extraction.
Special protection and regulation of strategic, tactical, and radioactive minerals are included in the bill, along with provisions to minimize environmental degradation related to mineral use, in line with environmental protection concepts.
Increased Provincial Authority in Exploration
Rights to mineral exploration will now be regulated according to provincial laws. Previously, mineral-related activities were exclusively controlled by the central government of Nepal.
For mines and minerals extending across two or more provinces, exploration will proceed with mutual agreement among the provincial governments. In case of disputes, exploration will be conducted through the Department of Mines and Geology.
However, mining extraction rights remain under the central government. The department itself or licensed companies may conduct extraction.
The bill also states that the government may assign responsibilities related to mining and mineral extraction to provincial and local levels through gazette notifications. Protection of mines and minerals will be the responsibility of the respective local governments. All authority over radioactive minerals will remain with the central government.
Special Provisions for Strategic and Tactical Minerals
According to the proposed law, the government of Nepal may designate minerals as strategic or tactical based on usage, availability, and national interest.
For such minerals, the government will have the authority to set necessary conditions, impose bans, and enforce special restrictions at the locations where the minerals are found.
Rights to operate on strategic minerals will remain fully under the government’s control. Activities involving these minerals must be carried out through government-owned companies.
No Permit Required for Collecting Basic Construction Materials on Private Land
Under the bill, companies wishing to conduct mining and mineral exploration or extraction must obtain mandatory permits. Nevertheless, individuals are allowed to collect and use ordinary construction materials such as stone, gravel, sand, soil, and slate from their private land for personal use without a permit.
Permit Duration for Exploration Defined in the Act
The bill specifies durations for exploration permits, which were not clearly defined before. Multi-mineral exploration permits will last three years, important minerals two years, and ordinary minerals one year. Previously issued permits will be adjusted accordingly under the new provisions.
Extraction Permit Duration
Extraction permits will be valid for up to 30 years. Very small, small, medium, and large mining permits will have validity periods of 10, 15, 20, and 30 years respectively.
If extraction is not completed within the specified period, extension is permissible, with extensions lasting 2, 3, 5, and 7 years respectively.
Companies must begin extraction within two years of receiving the permit. Mining operations can be halted if environmental laws and regulations are violated.
Fines to Increase Significantly
Unauthorized mineral exploration or extraction will result in fines up to NPR 500,000. Penalties for extraction violations will be scaled according to the nature and quantity of the minerals, potentially reaching between NPR 2.5 million and NPR 10 million — up to 100 times higher than current laws.
For mineral damages, a compensation amount equivalent to 50 times the prescribed royalty rate will be collected. Violations may lead to fines between NPR 500,000 and NPR 1 million, and imprisonment ranging from five to ten years.
The new law stipulates a fine of up to NPR 10,000 for obstructing inspectors during their duties.
Mining activities outside the authorized area will incur damages and fines between NPR 500,000 and NPR 1 million to the company.
Exporting, extracting, transporting, or selling banned minerals is punishable by damages, fines, and confiscation of goods.
Damage assessments will be based on 10 to 15 times the applicable royalty rate.
Individuals or organizations obstructing or acting contrary to the law may be fined up to NPR 200,000.
Fines will be collected like government dues, and provincial and local governments will have jurisdiction to enforce penalties as per their authority.
