The Government leader has ordered a halt in the licensing of exploration and mining projects nationwide from August 30 without specifying how long this halt would remain in force.
Prime Minister Nguyen Tan Dung asked the Ministry of Natural Resources and Environment to review the current licensing situation nationwide and propose measures to tighten control over mining operations.
He requested the Ministry of Industry and Trade and the Ministry of Construction to report on the mineral processing and export situations for each type of mineral under their management and work out appropriate remedies.
The ministries were asked to report these matters in this month’s cabinet meeting.
The Prime Minister’s instruction was a strict step in rectifying messy mining activities which have recently grown into a major public concern.
The mining industry had seen major hurdles from planning, licensing, post-licensing inspection to export, Deputy Minister of Natural Resources and Environment Nguyen Linh Ngoc acknowledged in a meeting in
Industry analysts agreed the current topsy-turvy in mining operations was a result of rampant licensing, poor planning and lax management.
The introduction of the Mining Law in 2005, which decentralized mining licensing to local authorities, had triggered a boom in mining projects as local administrations, considering mining a major source of revenues, readily licensed any exploitable mines.
According to reports from 51 provinces and cities, the country had by the end of August had nearly 3,900 valid mining licenses issued by local governments. The General Department of Geology and Minerals of Vietnam (GDGM) estimated this figure at 4,200, taking into account full statistics from all 63 provinces and cities nationwide. There were also nearly 660 mining licenses granted by the Ministry of Natural Resources and Environment and the Ministry of Industry and Trade.
Not only rampant licensing but easy planning was largely attributed to the chaos in mining activities, said Le Van Thanh, deputy director of GDGM’s Mining Control Department, stressing that ministries and localities were making different plans for their own sake.
The Ministry of Construction planned on minerals used as construction materials, the Ministry of Industry and Trade, on other minerals, and local governments, on minerals under their licensing power, Thanh said, pointing out such planning would certainly take into account internal interests, causing inconsistency and uncontrollability in overall planning and implementation.
Local planning was currently made easily and revised constantly at the will of local administrations, leading to disordered implementation, said Trinh Xuan Ben, director of GDGM’s Mineral Department.
Together with easy planning, poor post-licensing inspection worsened the situation. After licensing mining projects, state management agencies did not know anything about these projects such as their output or market outlets, Ben said, citing failure in titanium processing projects as an example.
The mining industry’s problems were in fact touched upon in a report released recently by the Vietnam Chamber of Commerce and Industry (VCCI), which revealed hurdles in mining operations, including inefficiency, waste, low mineral output and lax management and inspection.
The report showed that during 2005-2008, total investment in the mining industry ranked fifth among 18 major industries and sectors but its contribution to the economy was rated only eighth.
The industry only ranked 11th in employment generation, but over 50% of its labor had short-term jobs and unstable incomes, the reported stressed.
It noted that despite investment preferences given to the mining industry, its products were poor in terms of diversity, quality and commercial value, resulting in low export value which failed to offset the import of processed minerals.
The report pointed out that most mineral processing projects were small- or medium sized with outdated technologies, leading to low mineral output and waste of natural resources.
According to the Development Consultancy Institute, the loss rate in pit-coal mining was 40-60%. The figures were respectively 26-43% for apatite and 15-30% for metal ores. Losses in mineral processing were also high, with the gold recovery rate standing at merely 30-40%.
While most minerals were exploited and exported raw with low profits, mining operations were causing serious environmental consequences. But environmental protection and management remained formalistic and security had not fully paid to the environmental restoration fund, the VCCI report said.
Lack of supervision over miners’ declarations of output as a basis for taxation had resulted in loss of minerals and royalties, the report said.
To redress the situation, mining operations should be reviewed comprehensively and objectively, taking into account the position of the mining industry in national development over the past time and in the future, said Pham Quang Tu, director of the Social Counter-Argument Support and Consultancy Office of the Vietnam Union of Science and Technology Associations.
He stressed the review aimed to ensure only effectively and lawfully operating enterprises be allowed to continue operation.
He recommended to complete sub-law documents and master strategies and planning on mining before resuming licensing of mining projects.
The country boasts over 5,000 mines with more than 60 kinds of minerals, with some of world reserves such as bauxite, titanium, rare earth and lime stone. Its oil reserve is estimated at around 6 billion tons and gas reserve at about 4 trillion m3. The mining industry annually contributes 10-11% of the GDP with 95% coming from oil revenues. In 2009 alone, mineral exports yielded around USD 8.5 billion, including USD 6.2 billion from crude oil, accounting for around 25% of state budget revenues.
There are now over 2,000 mining enterprises some 90% of which were small-sized.- (VLLF)