Tag: Mining

Chinese technology may kill bauxite projects: scientists

The warning about losses that could be incurred by the two bauxite projects in the Central Highlands has become a reality. The Tan Rai bauxite project is predicted to take a loss of VND460 billion in the first three years of operation, while Nhan Co would incur a loss of VND3 trillion over six years.

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Launching “The Framework for Extractive Industries Governance in ASEAN”

Hanoi, December 5th, 2014 – People and Nature Reconciliation (PanNature), in cooperation with Institute Essential Service Reform (IESR), organized a half-day workshop on “Launching the regional framework on EI governance”.

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Poor supervision over mining allows many to get rich

A lack of transparency in exploiting natural resources has resulted in large amounts of revenues from mineral exploitation flowing into the pockets of individuals instead of State coffers.

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Resources sector needs oversight

The seminar was organised by the People and Nature Reconciliation, a Vietnamese not-for-profit organisation which was established in 2004 with an aim to protect and conserve diversity of life and improve human well-being in Viet Nam.

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Foreign pressure forces Vietnam house to shelve hike in mineral royalties

Mining companies worry that digging up Vietnam will no longer be as profitable.

In an unprecedented move, three foreign embassies have jointly urged Vietnam’s legislature not to approve a government proposal to increase royalties on minerals mined in the country out of fear it would hurt companies’ profits.

Gold bars are counted before given to a customer at a gold shop in HanoiGold bars are counted before given to a customer at a gold shop in Hanoi. Vietnam’s legislature has put off the hike in royalty rates on gold to 17 percent from the current 15 percent after three foreign embassies said it would hurt companies’ profits. PHOTO: REUTERS

According to a joint letter read out aloud at a meeting of the National Assembly’s Standing Committee on October 12, the embassies of Canada, Australia, and New Zealand said the proposed hikes in mining royalties will affect the investment climate in Vietnam and the country’s ongoing negotiations on the Trans-Pacific Partnership, an ambitious US-led free trade agreement.

The national legislature yielded to the pressure, shelving the planned increases and asking the Ministry of Finance, which put forth the proposal, to reconsider them.

At the October 12 meeting, house leaders expressed concerns that the hike in royalty rates on gold to 17 percent from the current 15 percent would have a bearing on foreign investment. The house returned the proposal, which also sought to increase the royalty rates on other key minerals, to the Ministry of Finance for “further consideration”.

“We need to tread very carefully on this issue,” house speaker Nguyen Sinh Hung said at the meeting.

The ball now is in the court of Prime Minister Nguyen Tan Dung, who will review the issue and consult with the National Assembly. His say on the matter will likely sway the legislature to vote one way or the other.

Royalty payment is a unique feature of the extractive industries. It is not tax paid on profits earned from minerals but the price that mining companies must pay for the minerals if they want to take them out of the ground.

This was the second time in three months the nation’s legislative body had deferred voting on the hikes in mineral royalties.

In August, it also rejected a government proposal to increase the royalty rate on gold to 22 percent. The Ministry of Finance then adjusted the rate to 17 percent but still, a number of businesses, foreign trade associations and embassies have vehemently objected to it.

The three embassies declined to reveal the full content of the letter when contacted by Vietweek, but their position appeared to be in line with a letter sent last July to the ministries of Finance and Planning and Investment by the Vietnam Business Forum, a consortium of international and local business associations and chambers of commerce.

“The existing mining legislation in Vietnam and the fiscal regime to which miners are subject already causes foreign investors to rank Vietnam as one of the worst places in the world in which to invest in the industry,” the letter said.

“These proposed royalties will not improve investors’ perception and provide further evidence that investors cannot trust the Vietnamese government to maintain a stable fiscal regime once they have committed investment to projects,” it said.

Canary in the hole?

Foreign gold producers have welcomed the decision to put off the royalty hikes.

“We… see it as a positive step for the growth of a sustainable mining industry in Vietnam and a positive signal to foreign investors,” David Seton, Chairman of Besra Gold Inc, told Vietweek. The company runs the Bong Mieu and Phuoc Son mines in central Vietnam.

But Vietnam is not the only country thinking about increasing mining royalties this time. Elsewhere in the world, Canada’s Quebec, Western Australia, and India also have plans to do so.

A study in India indicates that miners have been making “substantial profits” and recommends increases in royalties of key minerals.

Do Hoang Anh Tuan, deputy minister of finance, said the proposed hikes in mining royalties would ensure gold producers reap “reasonable benefits.”

The ministry has defended the move by saying it would help deter the already dire hemorrhage of natural resources in the country.

Geologists believe that Vietnam has substantial reserves of minerals such as iron ore, coal, copper, bauxite, gold and zinc.

In the past, foreign mining companies operating in Vietnam have warned that they would pull out investment and go elsewhere in the region because of the government’s tinkering with the tax and royalty regime.

“By way of comparison, we have a major project in East Malaysia in which we will be investing over the next three years. There we have a 0 percent royalty and half the corporate income tax rates of Vietnam,” Seton said.

Experts say it is no surprise that companies and their embassies are so resentful against such increase in mining royalties.

“The reaction from companies and mining lobby groups is the same, including threats to close mines,” said Trinh Le Nguyen, executive director of People and Nature Reconciliation, one of Vietnam’s few locally based conservation groups.

“Nevertheless, if the government of Vietnam plans to hike the royalties, they should keep in mind the principle of ‘no surprise’ to consult the industry carefully,” Nguyen said.

Gold producers blame their dissatisfaction on Vietnam’s knee-jerk tax regime and often threaten to pull out of the country. They say the government has in the past signed 25-year contracts with companies only to “unilaterally change” the contracts every ten years or so to hike royalties.

But experts say the most recent proposed royalty increases are still within the framework defined by the 2009 Law on Royalties, which “companies are obviously well aware for their business plan development,” Nguyen said.

Vietnam will slash corporate income tax to 22 percent from the current 25 percent from January 1 next year. The country plans to bring it down further to 20 percent in the 2016-2020 period.

At the end of the day, in the case of economic downturn, the mining industry and the government can negotiate tax cuts or other measures, experts say.

“But again, the industry should not lump royalties with taxes,” Nguyen said.

Source: VietWeek

Yesterday mining tells on Vietnam today

The report which has been released by the environment organization PanNature showed how Vietnam has to pay the penalty for the natural mineral exploitation, hailed as a key industry which creates more jobs, enriches the local budgets and helps eliminate hunger and reduce poverty.

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Central coastal areas turn topsy-turvy with mineral exploitation

20130327095623-dThe whole land strip in the central region, which is believed to possess big tourism potentials with beautiful beaches, has been damaged by the mineral exploitation activities.

For the last many years, central region’s people have been nourishing the dream of getting rich from titanium exploitation.

Titanium is a very important material in the aviation and cosmology industry. Titanium and its products have become more and more expensive in the last 10 years.

The titanium dream

According to Truong Duc Chinh from the Vietnam Coal and Mineral Industry Group (Vinacomin), Vietnam ranks the 11th in the world in terms of titanium reserves. Of the 14 million tons worth of titanium reserves, 9 million tons are believed to be situated in the coastal areas from Quang Ninh to Ba Ria – Vung Tau, mostly in Ha Tinh.

The latest report of the Vietnam General Department of Geology and Minerals showed that a huge titanium source in the red sand layer, estimated at 200 million tons of heavy minerals, has been found in the south of the central region, from Ninh Thuan to Ba Ria – Vung Tau province.

The latest optimistic estimates say the reserves could be 650 million tons, a huge number if noting that the total titanium reserves all over the world are just 1,400 million tons.

The figures have made people hope that Vietnam would become a “titanium power.”

However, Pham Quang Tu, MA, Deputy Head of CODE, a development consultancy institute, stressed that the figure was just the predicted reserves, while it does not mean the figure Vietnam can exploit and sell for money.

“One must not entertain the illusion about the huge titanium reserves. It may happen that Vietnam can only exploit titanium in the areas with easy exploitation conditions, while the remaining would still be in earth’s crust forever, or they would be exploited, but have no economic value,” Tu said.

Hurrying to exploit titanium for sale for money

CODE and PanNature, which once conducted a survey in Binh Dinh province, the locality with the largest-scale titanium exploitation on the black sand layer, met a Chinese language interpreter, who did the marketing for a Chinese enterprise specializing in collecting titanium to export to China.

The interpreter said that the Chinese enterprise would buy all the titanium to be offered to it.

The years 2008-2009 were the highest peak time of titanium exploitation. At that time, 800,000 tons of titanium was exploited every year in Binh Dinh. The figure did not count on the illegally exploited titanium, which was not shown on the report. The figure 800,000 tons was much higher than the amount of titanium the Prime Minister allowed to exploit every year.

The Binh Dinh provincial authorities granted 36 licenses to enterprises, allowing to exploit titanium on an area of 656 hectares. Meanwhile, the Ministry of Natural Resources and the Environment granted 7 licenses.

On March 19, 2013, the People’s Committee of Ninh Thuan, the neighboring province of Binh Dinh, granted a license to Vinaminco Ninh Thuan, allowing the enterprise to exploit titanium on the area of 1,200 hectares in Thuan Nam district.

On the central beaches, titanium exploitation sites have mushroomed. It’s too easy to get titanium from the black sand layer. According to Dr Dang Trung Thuan, in Binh Dinh province, ore can be found just several meters beneath the sand layer.

The large-scale uncontrollable titanium exploitation has damaged a lot of beaches in the central region.

Source: VietNamNet Bridge

Improving the economic efficiency of the mining industry

On March 20, 2013, in Binh Dinh, the People’s Committee of Binh Dinh, People and Nature Reconciliation (PanNature) and Consultancy on Development Institute (CODE) have jointly organized the workshop on “Revenue management measures and improvement of the economic efficiency of the mining industry.” This is an opportunity for managers and experts to share experiences and methods for management of revenues from mineral resources in the world, discuss the cooperation to develop a revenue management model for mining activities in Binh Dinh, and propose policies for better governance of mineral resources at the national level.

titanium-miningTitanium mining in Binh Dinh.

It is known that Binh Dinh has abundant mineral resources. To date, the province has identified 24 kinds of mineral with 154 mines. The minerals with potential, both in terms of volume and quality, are titanium, building stone and hot mineral water. Each year, the revenues from resource and environmental charges of Binh Dinh are up to hundreds of billions of VND. However, a recent study of the Consultancy on Development Institute (CODE) has pointed out a number of shortcomings, in economic efficiency and revenue management, in mining activities in Binh Dinh that need to be addressed.

Source: MONRE

Revised Law to Better Preserve Minerals

The management of the exploration and exploitation of natural resources should be strengthened to preserve valuable assets for younger generations, according to attendants of a conference in Ha Noi last week.

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Seminar on Mining Laws and Transparency in Extractive Industries

The extractive industries bring about a significant source of revenues for Vietnam to boost its growth in recent decades. The government of Vietnam has devoted lot of efforts in managing oil, gas, and mineral resources for development through a number of policies and laws. The current Mining Law, which was promulgated in 1996 and revisited in 2005, is going to be revised and passed by the National Assembly during its two annual meeting sessions in 2010.

A coal mining site in Quang Ninh province. Photo courtesy of PanNature, 2009.

A coal mining site in Quang Ninh province. Photo courtesy of PanNature, 2009

Consultancy on Development (Code) and People and Nature Reconciliation (PanNature)  have been working together to promote better governance of natural resources, including the extractive industries, toward the goal of sustainable development for Vietnam through research and advocacy activities. The Revenue Watch Institute (RWI) is one of leading non-partisan organizations working to promote good governance and further transparency of natural resources throughout the world. RWI also actively promotes and support the adoption the Extractive Industries Transparency Initiative (EITI) in many countries.

mining-seminar-oct2009-01

This seminar was co-organised in Hanoi on 12th October 2009 by three above-mentioned organisations with aim to share international experiences on mining legislation, transparency in the extractive industries, and Vietnam’s perspectives on these issues. Program Objective

  • Sharing international experience on best practices of mining laws and values of transparency in governing extractive industries;
  • Discussing the potentials and possibilities of promoting EITI principles in extractive industries and natural resources in Vietnam.

Venue Bengawan Solo Room, 1st Floor, Hanoi Horison Hotel 40 Cat Linh Street, Hanoi, Vietnam Seminar Materials

Useful Links

People and Nature Reconciliation | Office: 24 H2, Khu do thi moi Yen Hoa
Yen Hoa quarter, Cau Giay district, Hanoi, Vietnam
Phone: ++8424 3556-4001 | Fax: ++8424 3556-8941 | Email: contact@nature.org.vn