The current Law on Minerals was enacted on September 1, 1996, and amended in 2005. Together with other documents governing the mining industry, the Law has formed a legal framework to encourage organizations and individuals of all economic sectors to invest in mining. The number of mining enterprises has increased from approximately 400 in 2000 to over 1,500, creating stable employment for more than 300,000 laborers in over 4,500 mines nationwide. The output value of the mining industry (exclusive of revenues from oil and gas) accounts for three per cent of gross domestic product (GDP). The mining industry also sees an inflow of foreign investors, mostly in mining activities to serve the industrial production of concrete and wall and floor tiles, white limestone, mineral water, gold, nickel and titanium placers, schist tiles and iron ores.
After 13 years in effect, the Law has revealed many shortcomings, particularly in the management and use of mineral resources. In addition, as Vietnam was admitted to the World Trade Organization in 2007, the system of legal documents, including those governing mining activities, should be amended to conform with international law and practice.
The draft of a new Law on Minerals was recently submitted to the National Assembly at its seventh session for deliberation. Compared to the 1996 Law, this draft has 53 new articles and 34 revised articles arranged in 11 chapters.
According to drafters from the Ministry of Natural Resources and Environment, the draft Law has been designed with its governing scope kept unchanged while adjustments have been made to regulations on the elaboration of mining and mineral processing plans.
The draft Law retains some policies established under the current law, involving investment preferences and encouragement for projects applying advanced techniques and technologies for environmental restoration and full recovery of useful substances and projects turning out metal or alloy products or products of high economic value; and restriction of the export of minerals in the form of crude materials or unrefined ores. A number of new policies are introduced, aiming to more closely and effectively manage mineral resources and increase the sector’s contributions to the state budget. These policies relate to the assurance of ownership rights over investment capital and assets and lawful rights and interests of mining organizations and individuals; raising of funds for geological and mineral baseline surveys from all economic sectors; allocation of state budget funds for the exploration of minerals of strategic significance; and encouragement of the construction of mineral processing centers.
In order to lay a complete legal foundation for these activities, the draft Law is incorporated with several provisions of sub-law documents concerning the scope and principles of geological investigation of mineral resources and the rights and obligations of mineral investigation organizations.
A new mechanism is provided in the draft Law to lure investment capital for mineral investigation. Accordingly, the State welcomes all institutional and individual investors, allowing them to select areas for application of licenses to explore minerals which are discovered through investigations and giving them priority in participating in mineral exploration and exploitation rights auctions.
With a view to reforming administrative procedures in the mining industry, the draft Law abolishes regulations on the grant of mineral survey licenses. Organizations and individuals that wish to conduct site surveys for selection of areas for application of an exploration license would only be required to seek written permission from the provincial-level People’s Committee. Enterprises of all economic sectors set up under the Law on Enterprises and foreign-invested enterprises established prior to the effective date of the Law on Enterprises which have registered for mining activities, would be allowed to conduct mineral exploitation in Vietnam. Meanwhile, mineral exploration rights would also be extended to foreign enterprises having representative offices or branches in Vietnam.
To be granted a mineral exploration or exploitation license, the applicant would be required to meet several conditions on technical and financial capacities. Specifically, project owners’ equity capital must be at least 50 per cent for exploration projects, or 30 per cent for exploitation projects, of the total investment capital. Proposed projects must also be in line with approved mineral exploration and exploitation plans. For foreign-invested enterprises, mineral exploitation licenses would be granted concurrently with investment certificates or after investment certificates are granted. The maximum duration of a mineral exploration license would be increased from four years as currently prescribed to six years, including extensions, so as to match the time requirements of mineral exploration projects.
While retaining most of the basic rights and obligations of investors engaged in mineral exploration and exploitation established under the 1996 Law, the draft Law offers them several new rights, including the right to conduct exploration to upgrade mineral deposits of areas for which exploitation licenses have been granted without having to apply for new exploration licenses, the right to transfer the exploration or exploitation right, and the right, to lease land in accordance with the implementation schedule of mineral exploration projects.
The draft Law gives a green light for the transfer of mineral exploration or exploitation rights but it stipulates that only organizations and individuals that obtain these rights through competitive bidding may transfer their licenses.
Within six months after the expiration of the exploration license, an investor whose exploration license is not granted through bidding would have the exclusive right to apply for a license to exploit minerals in the exploration area within the approved deposits. Past this time limit, if no application dossier is filed by the licensed explorer, the exploitation license would be granted to another investor.
While current law allows individuals to inherit mineral exploration rights, the draft law would restrict this right to organizations upon enterprise transformation or acquisition.
The draft law abolishes regulations on salvage in mines which are closed for liquidation. Mineral processing would be no longer subject to licensing but incorporated into mineral exploitation activities.
In order to institutionalize the policy of economizing the geology-mineral sector and restrict the “ask-give” mechanism, the draft law has a new chapter on financial matters in mining and auction of mineral exploration and exploitation rights. Under the draft Law, there would be two forms of auction, i.e., auction for the mineral exploration and exploitation rights and auction for the exploitation right. However, as it is a new matter, the draft Law only sets general principles and provide for the competence to zone and announce areas to be put up for auction, while other matters would be guided by the Government.
The draft law will be submitted to the National Assembly for passage at its year-end session.-