Mining rights to go up for auction

Auctioning for mining rights should help conserve the country’s resources and cut bribes

The plan denotes three northern areas where the mineral mining rights will be auctioned off. The first is an iron mine with an unknown reserve volume in Thu Cuc commune, Tan Son district, Phu Tho province. The second is a 1.4 million cubic-metre metacacbonat mine in Suoi Giang commune, in Yen Bai province’s Van Chan district. The third mine is a fluorit mine with an unknown volume in Binh Duong commune, Nguyen Binh district, Cao Bang province.

The plan also includes the auction of mineral mining rights for a gold reserve of undetermined quantity in Xa Khia commune, in the Le Thuy district of Quang Binh central province.

All these sites have been earmarked by the government for exploration and exploitation. According to the Ministry of Natural Resources and Environment (MoNRE), if the sale of mining rights for any of these mines fails to take place this year, it will be conducted in the years to come.

The MoNRE’s General Department of Geology and Minerals will work with relevant agencies to prepare dossiers and organise the auction of mining rights for these mines.

Tran Thanh Thuy, coordinator of the Vietnam Mining Coalition, welcomed this move by the MoNRE.

“Exploiters will have a more competitive investment climate thanks to auctions. It will also help reduce the legal, environmental, and social risks,” she told VIR.

According to Thuy, the granting of mining rights is one of the most important stages in the mineral exploitation process. This stage is aimed at selecting financially and technologically-competent enterprises capable of the exploitation task.

Under the Mineral Law approved in November, 2010, there are two licencing mechanisms. One is a non-auction-based licence, while the other licence is auction-based.

“However, since this law took effect in July 1, 2011, not a single mine has been licenced via auctioning,” Thuy said.

This means that all mines exploited to date have not been subject to auction, but have been licenced on an ask-give mechanism. In this scenario, actions by lower officials are contingent upon approval from superiors, with various ‘favours’ exchanged in return.

“This has caused big risks to enterprises, the state, and community. Many enterprises have lost lots of money and time, and in the end they have even failed to get the mining rights,” Thuy said.

“Additionally, many financially and technologically-incompetent enterprises have somehow received mining rights. They later sold the rights to other enterprises at a profit, making it harder for the authorities to manage the mines. This has negatively affected both the collection of state budget revenue and the environment,” she added.

According to the Vietnam Mining Coalition, almost all nations worldwide grant mining rights via auctions. In Vietnam, if such auctions are implemented properly, the government will be able to select able exploiters, thereby limiting the social and environmental risks.

The coalition also suggested that as with any auctioning form, the government would need to establish clear regulations on publicising the names of the auction participants as well as their financial and technological capacity and experience.