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Official Gazette

Thursday, August 13, 2020

Mining decrees stress sustainable development

Updated: 10:31’ - 27/04/2012

Mining activities are encouraged but must assure sustainable development of mineral resources.

This is the crux of two decrees recently issued by the Government to guide the 2010 Mineral Law which came into force on July 1, 2011.

These two decrees, namely Decree No. 15/2012/ND-CP of March 9, 2012, detailing a number of articles of the Mineral Law (Decree 15), and Decree No. 22/2012/ND-CP of March 26, 2012, providing mining right auctions (Decree 22), say that the mineral industry welcomes investors from all economic sectors but mining activities must conform to mineral strategies and master plans and assure rational, economical and effective exploitation and utilization of mineral resources to meet the needs of the present while taking into consideration the development of science and technology and mineral demands in the future. Besides, mining activities must be associated with the protection of the environment, natural landscape, historical and cultural relics and other natural resources.

Specific licensing conditions

Before the promulgation of the Mineral Law in 2010, many problems could be seen in the licensing of mineral activities. 

During three years from 2005 to 2008, a total of 3,882 mineral exploration, mining or processing licenses had been granted by provincial-level administrations. It was an impressive figure compared to 928 projects licensed by the Ministry of Industry (now the Ministry of Industry and Trade) and the Ministry of Natural Resources and Environment in 12 years from 1996 to 2008.

According to Mr. Le The Chien, deputy director of the Government Inspectorate’s Sectoral Economic Inspection Department, in some localities, out-of-planning projects accounted to 60% of total locally licensed projects. In the steel industry alone, 32 projects were licensed at variance with the approved master plan. More seriously, the central province of Nghe An granted 127 mining licenses to mine owners who had not yet obtained land use right certificates. Illegal mining, especially in remote and deep-lying areas, resulted in severe environmental pollution and negative social effects.          

To address this chaotic situation, the Mineral Law provides that mineral exploration, mining and processing activities must be licensed within the framework of mineral strategies and master plans. Vietnam has adopted an overall mineral strategy through 2020, with a vision toward 2030, and detailed strategies for petroleum and coal, two backbones of the country’s mining industry. Besides, 14 plans for exploring, mining and processing 31 major minerals nationwide have been approved.

To facilitate the enforcement of the Mineral Law, Decree 15, which took effect on April 24, specifies the responsibilities for formulating, appraising and approving mineral master plans.

At the central level, the Ministry of Natural Resources and Environment is responsible for elaborating master plans on geological baseline surveys of minerals, while master plans on exploration, mining and processing of minerals for construction and non-construction uses will be mapped out by the Ministry of Construction and the Ministry of Industry and Trade, respectively. Provincial master plans on exploration, mining and processing of minerals for use as common construction materials, peat, minerals in areas with small-scale and scattered minerals, and minerals at tailing sites of closed mines may be elaborated only after national mineral reserve areas are announced.     

To be licensed to explore minerals in areas where mining right auction is not required, an investor must have its equity capital representing the biggest proportion in the total investment of the mineral exploration project; have contributed funds for the geographical baseline survey of minerals in that area; and have made a commitment to mining and using minerals, if found, for domestic production under the approved mineral master plan.

Under Decree 15, business households may apply for licenses to explore minerals for use as common construction materials in an area not exceeding 1 ha or to mine these minerals or conduct salvage mining with an annual output of at most 3,000 m3 of primary minerals.

To obtain an exploration license, a business household must have an exploration project conformable to the local mineral master plan, sign an exploration outsourcing contract with a qualified mineral explorer, and possess an equity capital at least equal to half of the capital amount required for the exploration project. 

Meanwhile, an applicant for a mining or salvage mining license is required to have a project which is in line with the local mineral master plan and incorporated with plans to assure sufficient specialized personnel and appropriate mining equipment, technologies and methods; own an equity capital at least equal to 30% of the project’s total investment capital; and have its environmental protection commitments certified under the law on environmental protection.

Mining right auction

The mechanism of auction of the mining right is introduced for the first time in the 2010 Mineral Law in the hope that it will help the State increase revenues from mineral resources, while serving as a basis for transparentizing the process of licensing mineral activities.

As per Decree 22, effective as of May 15, auction of the mining right must be held in a transparent, public and fair manner to assure the lawful interests of bidders. An auction must be attended by at least three bidders and may be held only for an area with an approved mining right auction plan.  

Auction is required for both unexplored areas and areas with approved mineral exploration results. A contractor who wins the auction of the right to mine minerals in an unexplored area must conduct exploration and have exploration results appraised and approved by the national mineral deposit assessment council. For areas with available exploration results, auction invitation dossiers must be enclosed with a set of requirements on mining and deep-processing technology and equipment; quality and use purposes of mined and processed minerals and addresses of mineral users.

As explained by experts, the requirement to identify users of mined minerals for deep processing aim to minimize loss of natural resources. According to the findings of a research program recently conducted by the Consultancy on Development Institute (CODE), although the Mineral Law discourages the export of crude mineral products, ores and concentrates are still key export items of Vietnamese mining businesses, while the proportion of deeply processed products remains far below expectation compared to the value of the country’s natural resources.

According to Deputy Minister of Natural Resources and Environment Bui Cach Tuyen, mining activities, either large- or small-scale, are cited for many environmental, social and economic problems. Accumulation and spreading of mining solid waste and acid mine drainage cause soil, water and air pollution. Noise and vibration at mines may badly effect the health of local inhabitants. Meanwhile, inefficient use of mineral resources means a huge economic loss.

Hopefully, the two new decrees, with strict requirements on mineral exploration and mining activities, will enhance the management of natural resources and environment protection in mining activities and raise the efficiency of mineral utilization, so as to attain the goal of sustainable mining and development of mineral resources.-

 

VNL_KH1 

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