Articles
New Minerals Law Adopted To Create A Level Playing Field In Mining Sector

03 - 03 - 2011
By Phan Anh Vu* 

On 17 November 2010, the Vietnamese National Assembly adopted Minerals Law No. 60/2010/QH12 (the New Law) which will take effect from 1 July 2011 and replace the current 1996 Minerals Law. The New Law provides legal basis for auction of mineral exploitation right, reforms on licensing in minerals sector and contains some other remarkable provisions.

Most notably under the New Law, it will be put up to auction of mineral exploitation rights at areas excluded from non-auctioned mine areas which will be determined by the competent authorities. The principles and conditions required for auction will be provided by the Government. It remains to be seen how this regulation will be implemented, however it is expected to ensure transparency and to remove the existing "ask-give" mechanism. Furthermore, in addition to the current licensing charge, a fee for granting mineral exploitation right will be collected via auction or non-auction. Calculation method and the fee rate will be provided by the Government, based on auction price or reserves, quality and types of minerals and mining conditions.

Scope of mineral mining activities is also re-defined to further include mineral classification and beneficiation which in nature are mineral processing activities. As a result, an exploiter granted with a mining license will automatically have the right to process the exploited products without a processing license as required by the current 1996 Minerals Law. Another welcome reform provided by the New Law is that entities intending to conduct field surveys as well as specimen collection for mineral exploration purpose will be no longer required to obtain a prospecting license, but just a written approval from the provincial people's committee where the mineral exploration area is located.

For financial conditions to obtain exploration and mining license, the investor is required to present owner's equity capital equal to at least 50% and 30% of the total investment capital to implement the exploration project and the mining project respectively. This is to afford the general requirement set out in the New Law that entities permitted to conduct mineral activities must use technology, equipment and materials and comply with other provisions of the Law on Environmental Protection in order to minimize any adverse impacts on environmental elements; rehabilitate the environment ecology and land after the termination of each phase of, or the whole mineral activity.

Transfer of mineral exploration and exploitation right is still allowed. To limit the trading of licenses, such transfer however is required to meet, inter alias, the following respective conditions: (i) Transferor of mineral exploration rights has conducted at least 50% of the estimate of the plan for mineral exploration; (ii) Transferor of mineral exploitation right has completed the work of capital construction at the mine and has commissioned the mine; (iii) Transferee must satisfy all the conditions for issuance of the mineral exploration license or the mineral mining license.

The transfer of exploration and exploitation rights shall be subject to an approval of the competent licensing bodies. Such approval will be given in the form of issuance of a new respective license to replace the previous one.

With the foregoing reforms, the New Law is expected to level the playing field of mining sector and to effectively manage mineral resources in Vietnam.

(*) Please contact the author at vu.phan@indochinecounsel.com or our partners if you wish to have more information or specific advice for the topic of this article.
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