Mines and Mineral in Nepal : Unearthing the Path

to Prosperity

R. . P. KhanalMinistry of Industry

Department of Mines and GeologyKathmandu, Nepal

March 3, 2017

-- General Geological Setting and Mineral Resources- Present Status of Mines and Minerals, petroleum oil and gas -Investment Opportunities-Some Sub-sectors of Mines and Mineral need for FDI- Policy and Activities Reforms- Government Initiation for Investment• Conclusion

General Outline

Geology of Nepal Himalaya Geology of Nepal Himalaya (North to South)(North to South)

Inner Himalaya (Tibetan Tethys Zone) Inner Himalaya (Tibetan Tethys Zone) -------------------- STDFS ------------------------------------------ STDFS ---------------------- Higher Himalaya Higher Himalaya ----------- Main Central Thrust (MCT) ---------------------- Main Central Thrust (MCT) ----------- Lesser Himalaya (Mahabharat Range and Mid Lesser Himalaya (Mahabharat Range and Mid

Valleys) Valleys) ---------- Main Boundary Thrust (MBT)----------------------- Main Boundary Thrust (MBT)------------- Sub Himalaya (Chure/ Siwalik Range) Sub Himalaya (Chure/ Siwalik Range) ---------- Main Frontal Thrust (MFT) Or HFT ------------------ Main Frontal Thrust (MFT) Or HFT -------- Terai Plane / Indogangatic PlainTerai Plane / Indogangatic Plain

Each thrust/ fault forms boundary line between Each thrust/ fault forms boundary line between the two consecutive zones the two consecutive zones

Geological SettingGeological Setting

Mineral Potential of Mineral Potential of NepalNepal

Tibetan Tethys ZoneTibetan Tethys Zone- Salt, gypsum, limestone and natural gas- Salt, gypsum, limestone and natural gas- Black shale : favorable for REE- Black shale : favorable for REE

Higher Himalayan ZoneHigher Himalayan Zone- Precious and Semi-precious stones :- Precious and Semi-precious stones :Ruby, Ruby,

Sapphire, Acquamarine Garnet, Kaynite, Sapphire, Acquamarine Garnet, Kaynite, SilliminiteSilliminite

- Granites are favorable for Sn, W, U, REE- Granites are favorable for Sn, W, U, REE- Salt encrustation in Nursing khola, Mustang- Salt encrustation in Nursing khola, Mustang- L- Lead, zinc, tin, uraniumead, zinc, tin, uranium

Unexplored Mountains Unexplored Mountains

Higher HimalayaHigher Himalaya Tethys HimalayanTethys Himalayan

- Metal- MetalCu, Fe, Pb, Zn, Sn, W, Mo, Co, Ni, Bi, Au, Ag, U Cu, Fe, Pb, Zn, Sn, W, Mo, Co, Ni, Bi, Au, Ag, U

- Non-Metal- Non-MetalMarble, Limestone, Dolomite, Phosphorite, Marble, Limestone, Dolomite, Phosphorite, Magnesite,Talc, Magnesite,Talc,

-Semi precious stone-Semi precious stone: kyanite, garnet, tourmaline, quartz : kyanite, garnet, tourmaline, quartz etc.etc.

--PegmatitesPegmatites : favourable for REE : favourable for REE

--Limestone potential reserve >1500 million tonsLimestone potential reserve >1500 million tons

Lesser Himalayan ZoneLesser Himalayan Zone

Mineral Potential in Lesser Mineral Potential in Lesser Himalaya Himalaya

Copper: Wapsa Solukhumbu), 2.53 million Copper: Wapsa Solukhumbu), 2.53 million tons, 0.88 to 3.24% Cutons, 0.88 to 3.24% Cu

Pb-Zn: Khairang (Makawanpur), 1.54 Pb-Zn: Khairang (Makawanpur), 1.54 million tons, 2% Pb+Znmillion tons, 2% Pb+Zn

Iron: Those (Ramechhap), 10 million tons, Iron: Those (Ramechhap), 10 million tons, 44% Fe44% Fe

Iron: Nawalparasi, possible >50 million Iron: Nawalparasi, possible >50 million tons (under exploration), 55% Fetons (under exploration), 55% Fe

Polymetal: Bamangaon (Dadeldhura): Polymetal: Bamangaon (Dadeldhura): 1.708 million tons, 0.2 to o.43% Cu, 1.708 million tons, 0.2 to o.43% Cu, 133ppm W, also Mo, Bi133ppm W, also Mo, Bi

Natural Gas: Kathmandu , 300 million cu. mNatural Gas: Kathmandu , 300 million cu. m

Mineral in Lesser Himalaya Mineral in Lesser Himalaya Magnesite: Kharidhunga (Dolakha): 180 Magnesite: Kharidhunga (Dolakha): 180

million tons, 24 - 47.6% MgO on dead million tons, 24 - 47.6% MgO on dead burnt basisburnt basis

Gold: Lungri Khola (Rolpa):0.1 to 4 gm/ton Gold: Lungri Khola (Rolpa):0.1 to 4 gm/ton gold with gold with 0.8-400.8-40m thickness bands.m thickness bands.

U+Au : Gorang (Baitadi)U+Au : Gorang (Baitadi)

Phosphorite: Baitadi about 3 million tons, Phosphorite: Baitadi about 3 million tons, PP22OO55 10-32%, Bhajhang Phosphorite: about 10-32%, Bhajhang Phosphorite: about 3 million tons, P3 million tons, P22OO55 1-20.5% 1-20.5%

Talc: Kharidhunga, Gaighat, and other Talc: Kharidhunga, Gaighat, and other places alsoplaces also

Mineral Potential of Mineral Potential of Nepal Nepal Contd.Contd.

Sub Himalaya ZoneSub Himalaya Zone:: Construction materials, U, REE and Construction materials, U, REE and

Petroleum resourcesPetroleum resources

Terai Plain ZoneTerai Plain Zone:: Construction materials, and Petroleum Construction materials, and Petroleum

resourcesresources

Exploration Status of Mineral Exploration Status of Mineral Resources of NepalResources of Nepal

Altogether Altogether 63 commodities have been identified with the have been identified with the categories of categories of mineral showings,mineral showings, mineral mineral occurrences, sub-economicoccurrences, sub-economic andand economic depositeconomic deposit

2121 commodities of the commodities of the metallic mineralmetallic mineral group, group, 42 42 commodities of the commodities of the nonnon- - metallic mineralmetallic mineral group, group,

– 2323 commodities of commodities of chemical, fertilizer, insulator, chemical, fertilizer, insulator, ceramic, refractory and abrasive mineralceramic, refractory and abrasive mineral group group

– 66 commodities of the commodities of the gem mineralgem mineral group group– 99 commodities of commodities of construction materialsconstruction materials group and group and – 44 commodities of commodities of fuel mineral and geothermal springfuel mineral and geothermal spring

groupgroup

Status of Present Cement IndustriesStatus of Present Cement Industries((in production)in production) Sonapur Cement, Sonapur Cement, Ghorahi CementGhorahi Cement Hetauda CementHetauda Cement Udaipur CementUdaipur Cement Rolpa CementRolpa Cement Shivam CementShivam Cement

Maruti CementMaruti Cement Arghakhanchi Arghakhanchi

CementCement KEPY CementKEPY Cement Nigale CementNigale Cement Butwal CementButwal Cement Sarbottam CementSarbottam Cement

Total estimated Installed Capacity: 11,000 TPD

Market Demand: 15,000 TPD

List of Cement Industries (in List of Cement Industries (in pipeline)pipeline)

Hongshi Shivam, Nawalparasi,10,000 Hongshi Shivam, Nawalparasi,10,000 TPD, FDITPD, FDI

Sourya Cement, Udayapur, 1200 TPDSourya Cement, Udayapur, 1200 TPD Riddhi Siddhi Cement, Makwanpur, Riddhi Siddhi Cement, Makwanpur,

2200 TPD2200 TPD CG Cements, Palpa, 6000 TPDCG Cements, Palpa, 6000 TPD Dang Cement, Dang, 1200 TPDDang Cement, Dang, 1200 TPD Samrat Cement, Dang, 1200 TPDSamrat Cement, Dang, 1200 TPD

Mining Lease (ML) & Prospecting Mining Lease (ML) & Prospecting Lease (PL) StatusLease (PL) Status

S.N Minerals MiningSpecial License (Included)

1Calcite 1

2Coal 14

3Dolomite 1

4Iron-ore 3 2

5Kyanite 9

6Lead 3 1

7Limestone 46 12

8Magnesite 1 1

9Marble 2

10Quartz 4

11Quartzite 7

12Red Clay 5 4

13Talc 12

14Tourmaline 12

15Zinc 1 1

Total 121 21

S.N Minerals P License Special License1 Calcite 1 2 Coal 3 3 Dolomite 7 4 Iron-ore 5 5 Lead 2 16 Limestone 145 7 Quarzite 20 8 Red-clay 1 9 Talc 16

10 Zinc 3 11 Aquamerin 4 12 Quartz 2 13 Beryl 1 14 Copper 8 115 Corondum 1 16 Feldspar 1 17 Gold 14 18 Granite 2

19 Industrial clay 1 20 Kaynite 11 21 Keolin 1 22 Marble 1 123 Silica sand 8 24 Tourmaline 10

total 268 3

Location Map of Mining Licenses

Opportunity for More Opportunity for More InvestmentInvestment

Cement grade Limestone (about 1.3 billion Cement grade Limestone (about 1.3 billion tons)tons)

Dolomite: Huge deposit Dolomite: Huge deposit Construction materials: Huge deposit Construction materials: Huge deposit Magnesite: Nepal Oriend Magnesite, DolkhaMagnesite: Nepal Oriend Magnesite, Dolkha Zinc-Lead: RasuwaZinc-Lead: Rasuwa Iron: Dhoubadi, Nawalparasi ( Exploration Iron: Dhoubadi, Nawalparasi ( Exploration

work on going by DMG)work on going by DMG)

List of Prospects for InvestmentList of Prospects for InvestmentS.No. Prospects1 Jaitpani-Khamilek Limestone Deposit, Salyan2 Lakharpata Limestone Deposit, Surkhet3 Thumki Limestone Deposit, Balthali, Kavre4 Diyarigad Limestone Prospect, Baitadi5 Madanpur Limestone Deposit, Palpa6 Kepchhaki Limestone Prospect, JalpaChilune, Udayapur

7 Dhanpure Limestone Deposit, Syanjga8 Primary Gold Kimasepo-Jharban, Lungri khola, Rolpa

9 Primary Gold Bargo Gam Prospect, Lungri Khola, Rolpa

10 Agra Khola Copper Prospect, Makawanpur11 Kurule Copper , Udayapur12 Dumariya Copper Prospect, Chitwan

List Of Prospects for List Of Prospects for Investment Investment

S. No Prospects

13 Kalitar Copper Deposit, Makawanpur

14 Pandavkhani Copper, Baglung15 Minamkot Copper Prospect, Tanahun

16 Kottham Copper, Lead and Zinc prospects, Tanahun

17 Dhusa Copper Prospect, Dhading18 Labdi Iron Prospect, Tanahun19 Labang-Khairang Lead and Zinc

Prospect, Dhading, Makawanpur20 Kurule Copper Prospect, Udayapur

Map of Mineral Potential Area for Investment

Mines and Mineral sectors Needs to attract More Private

Investment- To set up Value Add Technology for Precious and semi-precious stones/ minerals

Legal ProvisionsLegal Provisions Acts and regulations areActs and regulations are

1.1. Mines and Mineral Act 2042 (1985) with first Mines and Mineral Act 2042 (1985) with first amendment, 2050( 1993)amendment, 2050( 1993)

2.2. Mines and Mineral Regulation, 2056(1999) with 4Mines and Mineral Regulation, 2056(1999) with 4thth amendment in 2016amendment in 2016

3.3. Nepal Petroleum Act, 2040 (1983)Nepal Petroleum Act, 2040 (1983)4.4. Petroleum Regulation, 2041(1985) with first Petroleum Regulation, 2041(1985) with first

amendment, 2046(1989) and second amendment, amendment, 2046(1989) and second amendment, 2051(1994)2051(1994)

5.5. Petroleum Industry (Income Tax) Regulation, Petroleum Industry (Income Tax) Regulation, 2041(1985)\2041(1985)\

• Other relevant Acts and regulations are1. Environment Protection Act and Regulation2. Forest Conservation Act and Regulation3. Foreign Direct Investment Regulations

Mines and Mineral Act and Mines and Mineral Act and RegulationRegulation

Licensing SystemLicensing SystemProspecting License: Prospecting License:

-Mineral resource having quality and quantity has not -Mineral resource having quality and quantity has not yet been determinedyet been determined-Prospecting Lease area: 0.25 sq km to 250 sq km-Prospecting Lease area: 0.25 sq km to 250 sq km

initial period of 2 to 4 years with a provision of initial period of 2 to 4 years with a provision of extension of 2 years.extension of 2 years.

Mining LicenseMining License-Mineral deposit having quality and quantity has -Mineral deposit having quality and quantity has already been established by explorationalready been established by exploration

-Mining Lease area: 0.5 sq km to 25 sq km -Mining Lease area: 0.5 sq km to 25 sq km Initial period of 5 to 30 years depending on the level of Initial period of 5 to 30 years depending on the level of mineral work with a provision of an additional 1 to 10 mineral work with a provision of an additional 1 to 10 yearsyears..

Mines and Mineral Act, Mines and Mineral Act, RegulationRegulation Other provisions are-Other provisions are-

1.1. Right of access to use the landRight of access to use the land2.2. Approval of testing and analyzing the samples Approval of testing and analyzing the samples

outside the countryoutside the country GoN possesses exclusive right to engage in mineral GoN possesses exclusive right to engage in mineral

works either undertaking mining operations directly works either undertaking mining operations directly or have such operations conducted by any other or have such operations conducted by any other individual by granting a license.individual by granting a license.

GoN bids the potential areas for PL or ML based on GoN bids the potential areas for PL or ML based on the minimum exploration cost. Nepal government the minimum exploration cost. Nepal government has right to participate in the mineral development has right to participate in the mineral development activities as a partner in terms of capital sharing or activities as a partner in terms of capital sharing or any other form of contributions.any other form of contributions.

Policy ReformMines and Mineral Regulation (3rd Amendment in 2016)

Mandatory Provisions for Mining Activities ( including Production ) within 1 year

Mines and Mineral Regulation (4th Amendment in 2016)

-Provisions of separate Technical and Financial proposals

-Eligible if pass in Technical proposal-Rating of technical (60) and Financial ( 40)

-New Prospecting Licenses and Bidding process open from 14 March, 2017

--First National Mineral Policy, 2017 is in the final Stage

National Mineral Policy, 2017 National Mineral Policy, 2017 (In final Stage)(In final Stage)

Sustainable use of mineralsSustainable use of minerals Establishment of National Mineral Development Fund Establishment of National Mineral Development Fund Demarcation of Mine Zone for the area with defined Demarcation of Mine Zone for the area with defined

mineral potentiality in terms of quality and quantitymineral potentiality in terms of quality and quantity Allow to hire international experts according to the Allow to hire international experts according to the

principle of Doctrine of Necessityprinciple of Doctrine of Necessity Construction of Approach road and electrification to all Construction of Approach road and electrification to all

mines with special prioritization to metal mines.mines with special prioritization to metal mines. Subsidy to exploration drilling costSubsidy to exploration drilling cost Felicitation to mines and mineral based industry that Felicitation to mines and mineral based industry that

employees more than 500 peopleemployees more than 500 people Special facilities in Royalty and tax to mines developing in Special facilities in Royalty and tax to mines developing in

least and underdeveloped regions.least and underdeveloped regions. No nationalization of mines and mineral based industryNo nationalization of mines and mineral based industry

Government Incentive for Private Sector Engaged in Exploration

-High Priority for Infrastructure Development in Mines Area- Providing the forest area for mines ( Expect National Parks)-Very Nominal Custom Tax for Exporting Mining Technology -Coordinating with various organization and local people

-Subsidy to exploration drilling cost (Mineral policy)-Felicitation to mines and mineral based industry that employees more than 500 people (Mineral policy)-Special facilities to mines developing in least and underdeveloped regions mentioned by government (Mineral policy)

- Special facilities in Royalty and tax to mines developing in least and underdeveloped regions. ( Mineral policy)

Petroleum Exploration Status in Petroleum Exploration Status in NepalNepal

PEPP/ DMG has conducted a series of geological PEPP/ DMG has conducted a series of geological and geophysical studies in southern part of and geophysical studies in southern part of countries with bilateral and multilateral cooperationcountries with bilateral and multilateral cooperation

Terai and Siwaliks have been divided into 10 Terai and Siwaliks have been divided into 10 exploration blocks, each of approx. 5,000 sq. kmexploration blocks, each of approx. 5,000 sq. km

Presence of petroleum source, seal and reservoir Presence of petroleum source, seal and reservoir rocks as well as structural trapsrocks as well as structural traps

Presence of petroleum oil and gas seeps in DailekhPresence of petroleum oil and gas seeps in Dailekh The geological study reveals that Nepal has The geological study reveals that Nepal has

potential geological environment to have natural oil potential geological environment to have natural oil and gas within Terai and Siwalik foot hills.and gas within Terai and Siwalik foot hills.

Already Production in Asam basin in India and Already Production in Asam basin in India and Potwar basin of Paksithan: similar geological Potwar basin of Paksithan: similar geological setting of Nepal setting of Nepal

Investment Opportunity in Petroleum oil Investment Opportunity in Petroleum oil and gasand gas

PETROLEUM LAW

Model Agreement:

PSC

Bidding process will be opened soon.Bidding process will be opened soon.

National and International oil companies National and International oil companies request for participation during the bidding request for participation during the bidding processprocess

Request for the Investment

Needs more investment in Metallic minerals:Needs more investment in Metallic minerals: (Iron Copper. Lead, Zinc & Poly metals) (Iron Copper. Lead, Zinc & Poly metals)

Needs to establish more and more Cement plants Needs to establish more and more Cement plants and allied industries based on limestone depositsand allied industries based on limestone deposits

High scope to Establish Magnesite Refractory Bricks, High scope to Establish Magnesite Refractory Bricks, Dolomite and allied industries, Construction materialsDolomite and allied industries, Construction materials

Opportunity for Petroleum as well as Natural gas Opportunity for Petroleum as well as Natural gas Exploration Development and ProductionExploration Development and Production

Scope for Institution development for man-power Scope for Institution development for man-power enhancement in mining, metallurgy and geological enhancement in mining, metallurgy and geological field. field.

Conclusion

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