Safeguards for mineral auction

More stringent rules will be adopted on mining business

The National Assembly  last week reported that the draft revision of the Mineral Law issued in 2005 provided new rules on mineral exploitation auctions.

National Assembly Vice Chairman Nguyen Duc Kien said the mineral exploitation brought hefty profits, thus exploitation rights must be auctioned to ensure a fair participation.

However, many deputies scrutising the draft revision at the ongoing National Assembly session underscored the need for specific auctioning regulations.

“Auctioning in this sector is very sensitive. The regulations must be very stringent to shun the transfer of projects by winners,” said the National Assembly’s Culture, Education, Youth and Children Committee chairman Dao Trong Thi.

He said the regulations should also require miners to meet strict equipment and human resources standards.

“For example, a financially strong enterprise could spend lots of money at an auction to win the exploitation right. But, it may have no mining technologies, resulting in buying up or even speculation of mines... This will upset the minerals market,” Thi said.

The draft’s Article 42 on criteria for exploration licencing stipulated that in order to be granted a licence, entities or individuals are required to have their own capital equal to at least 50 per cent of the total investment to implement the exploration project.

In another case, the draft’s Article 54 on criteria for mining licencing also stipulates that in order to obtain an exploration licence, entities or individuals are required to present equity equal to at least 30 per cent of the total investment to implement a mining project.

Many deputies argued that these requirements aimed to exclude financially incapable companies from obtaining licences for transferral purposes.  However, it was still unknown how an owner’s equity can be verified.

Moreover, the draft’s regulations on transfer of exploration rights also introduces a new concept, in which only exploration projects obtained under the auction process will be allowed to transfer their exploration rights which must be approved by relevant authorities. The transferee will be responsible for applying for a new exploration licence which will supersede the previous one.

Chairman of the National Assembly’s Law Committee Nguyen Van Thuan said if a licenced enterprise wanted to transfer the licence to another enterprise or delay the project, it must provide specific reasons or face heavy punishments. 

Minister of Natural Resources and Environment (MoNRE) Pham Khoi Nguyen said the new regulations were crucial to the mining sector to effectively manage  Vietnam’s mineral sources.

According to the Law Committee, the government’s decentralisation of licencing exploration and exploitation project management had encouraged localities to grant thousands of licences without appraising miners’ quality.

Many miners have been reportedly given exploration and exploitation rights after they had simply completed necessary investment procedures.

According to the MoNRE,  mining is now comprising 7 per cent of Vietnam’s gross domestic product, while it was 20-30 per cent in many countries rich in minerals like Vietnam. The MoNRE said there were 1,500 firms engaged in mining, which own over 4,500 mining projects nationwide.