General Director of the Viet Nam General Department of Geology and Minerals Nguyen Van Thuan talked to Thoi Bao Kinh Te Viet Nam (Viet Nam Economic Times) about new mineral exploitation regulations.
What do you think about the future of mining in Viet Nam given the new regulations on mineral exploitation fees?
The implementation of the 1996 Law on Minerals and the amendments in 2005 revealed that problems remain in exploitation activities. People have been exploiting large amounts of minerals without paying fees to the State and local residents are not benefiting from these activities.
The amended 2005 Law on Minerals allowed local authorities to issue certain kinds of exploitation licenses, and in only three years, they issued more than 4,000 licenses. Since then, the Government has only issued 500 more.
This has called for new regulations on mineral policies, especially in bidding for mines and collecting fees.
One of the main goals of this is to get rid of inefficient enterprises and help the State collect the correct amount of fees. The fees will be divided between the construction of infrastructure and social welfare in mining communities.
These regulations will help balance the benefits of the State, enterprises and local residents.
Mining firms still have reservations about the regulations on fees and how they are collected. Can you talk a little bit about this?
This is normal for any major State policy. We have responded to most concerns, but we have to admit that there are some objective points being made. For instance, some enterprises have asked for fees to be waived from July 1, 2011 to the time the law decree comes into force in January 2014 . During that time before legislation took effect, many enterprises have already profited from mining activities.
These concerns have been submitted to the Prime Minister and National Assembly. The General Directorate has also suggested that fees should not be collected for the two-year period.
Many enterprises are worried they will have to shut down following the new regulations. Do you think this is a possibility?
I think 20 to 30 per cent of enterprises will be forced to close because they can't afford the fees. It is estimated that enterprises will have to pay several billion dong, and some will even face bills of trillions of dong. Enterprises that don't run a tight ship will certainly have to close.
A circular on bidding for mineral mining activities will create a proper legal lobby for enterprises that are capable in terms of experience, technique and finance. Before this, mines were almost free, but now enterprises will have to follow strict financial regulations.
Which enterprises are most vulnerable to the new ruling?
Enterprises that have applied for exploitation licences in major mines but fail to operate efficiently are most at risk. Mining is a risky activity because companies do not know what's underground. It requires professionalism, experience, skill and the financial capacity for long-term investment.
Many enterprises are struggling because their mines do not hold what was initially expected. What are the solutions for them?
Previously, the law stated that enterprises were financially responsible for exploration work and the data would be collected for the State to approve, but those were just estimates at the time. Discovery and exploitation are totally different entities – so many enterprises really had difficulties paying the exploitation fees.
The amended law will allow enterprises to hire consultants under the supervision of authorised agencies to ensure the accuracy of the figures. Based on those reports, the State will approve and adjust exploitation fees.
In many countries, exploitation work is performed scientifically and in absolute detail, and they only invest when they are sure about the figures. In Viet Nam, we are doing the opposite: enterprise build factories before exploring the land thoroughly, so failure is inevitable. —VNS