On 17 November 2010, the Vietnamese National Assembly adopted the new mineral law (2010 Mineral Law), which will take effect from 1 July 2011 (Effective Date), and replaces the 1996 Mineral Law (as amended in 2005).  

The 2010 Mineral Law introduces new changes to and supplements the existing legal framework for mineral exploration and exploitation, including streamlining the licensing process and imposing more stringent financial conditions which must be satisfied to obtain mineral licenses.  

A prospecting license is no longer required. An organisation or individual (an “entity”) eligible for mineral exploration can now conduct a field survey and take specimens from the land surface for mineral exploration purposes with only a written consent from the provincial People’s Committee in the locality of the proposed exploration site.  

A processing license is also no longer required. The scope of mineral mining activity has been expanded to include mineral classification and enrichment, which in nature is mineral processing.  

To ensure participation of potential investors, an entity is required to contribute owner’s equity capital equal to not less than 50% (in the case of an exploration project) and 30% (in the case of a mining project) of the total investment capital.  

The 2010 Mineral Law also contains new provisions on mineral strategy, auctioning of mineral mining rights and fees for issuing mineral mining rights. The State will collect fees for issuing licenses to mine minerals with the fee level to be based on value, reserves and quality of minerals, or category or group of minerals to be exploited as well as mining conditions.  

The salient provisions of the new law are discussed below.

Governing scope  

The 2010 Mineral Law regulates basic geological surveys of mineral resources; protection of untapped minerals; mineral exploration and mining; and State administration of minerals located within the territory of Vietnam including islands, sea territory, regions adjacent to the sea territory, exclusive economic zones and the continental shelf of Vietnam.  

The exploration or exploitation of oil and gas, and natural water (other than mineral water and natural thermal water) are not within the scope of the 2010 Mineral Law.  

Mineral policy, strategy and master plans  

For each period, the State will develop a mineral strategy and mineral master plans to ensure and promote sustainable socio-economic development and national defence and security, ensuring that minerals are protected, mined and used reasonably and in a cost effective and efficient way.

The State encourages investment projects in mineral mining with a focus on processing and use of minerals to produce metal and metal alloy products or other products with high socio-economic value and efficiency.

The State’s policy is to encourage the export of minerals but on the basis that there are sufficient mineral resources for domestic production.  

Mineral activities, comprising mineral exploration and mining, must be conducted in accordance with mineral master plans. Mineral exploration is defined to mean activities aimed at determining reserves and quality of minerals and other information relevant to servicing mineral mining. Mineral mining is defined to mean activities aimed at extracting minerals including capital construction of the mine and excavation, classification, enrichment and other related activities.  

The mineral strategy must be prepared for each ten-year period with the outlook for 20 years, consistent with the planning period of the strategy on socio-economic development. The Ministry of Natural Resources and Environment (MONRE) will preside over co-ordination with other ministries to prepare such mineral strategy and submit it to the Prime Minister of the Government (PM) for approval.  

Mineral master planning comprises:  

  • A master plan on basic geological surveys of mineral resources  
  • A master plan on nationwide general mineral exploration and mining  
  • A master plan on nationwide mining and use of each kind and category of minerals for building materials, and a master plan on nationwide mining and use of each of the other kinds and categories of minerals  
  • A master plan on exploration, mining and use of minerals in each province or city under central authority  

The period for the master plan on basic geological surveys of mineral resources is 10 years, with the outlook for 20 years. The period for other master plans will be five years, with the outlook for 10 years.  

Mineral areas  

For the purpose of mineral management, mineral areas are classified into:  

  • Areas where minerals activities are permitted, including areas containing scattered and small-scale minerals  
  • Areas in which mineral activities are prohibited  
  • Areas in which mineral activities are temporarily prohibited  
  • Areas of national mineral resources reserves, namely areas containing untapped minerals and comprising:  
    • Areas containing minerals which it is necessary to reserve for sustainable socio-economic development; and  
    • Areas containing minerals but not satisfying the conditions for effective mining, or satisfying such conditions but without solutions for remedying adverse impact on the environment  

Auction of mineral mining rights  

The issuance of mineral mining rights, in principle, must be conducted via auction. The principles and conditions required for such auctions will be provided by the Government. This new regulation on auctioning mineral mining rights is expected to enhance transparency and abolish the current “ask-give” mechanism in licensing which implies negative connotations.

Mineral licensing

Under the 2010 Mineral Law, there are only two types of mineral licenses: a mineral exploration license and a mineral mining license. In each case, the license term has been increased in line with international mining practice. Of note, in order to get a mineral mining license, a mining investment project must be formulated during the term of mineral exploration stipulated in the mineral exploration license. These matters and the relevant licensing authorities authorised to issue licenses will be discussed in more detail below.

AUTHORITY TO ISSUE MINERAL EXPLORATION LICENSES AND MINERAL MINING LICENSES

Provincial People’s Committees are the responsible authority to issue mineral exploration licenses, and licenses to mine minerals used for common construction materials, peat, and minerals in areas which contain scattered and small-scale minerals as delineated and announced by the MONRE; and to also issue licenses for individual mining.

The MONRE is the responsible authority to issue mineral exploration licenses and mineral mining licenses in all other cases.  

The State licensing body which has issued a mineral exploration license, mineral mining license, or individual mining license will have the authority to extend, withdraw, or consent to the surrender of that same license; to consent to the surrender of part of the exploratory or mined site; and to consent to the transfer of the mineral exploration or mining rights stipulated in such license.

MINERAL EXPLORATION LICENSES  

Entities registered to undertake mineral exploration activities may comprise :  

  • Enterprises established in accordance with the Law on Enterprises  
  • Co-operatives and unions of co-operatives established in accordance with the Law on Co-operatives  
  • Foreign enterprises with a representative office or branch in Vietnam  

Family businesses registered to undertake mineral exploration will be eligible to explore for minerals used as common construction materials.  

An organisation must satisfy all the following conditions in order to engage in mineral exploration:  

  • Be established in accordance with law  
  • Have a person in charge of technical matters who has graduated from a university faculty of geological exploration and who has at least five years’ work experience in mineral exploration; and who has a thorough understanding of the technical standards and requirements for mineral exploration  
  • Have technical staff trained in the specialties of exploration geology, hydrogeology, engineering geology, geophysics, drilling, excavation and other related specialties  
  • Have specialised equipment and apparatus necessary for building the mineral exploratory works

An entity must satisfy all the following conditions in order to be granted a mineral exploration license:  

  • Be selected by the competent State body or win an auction of the mining right to an unexplored area, and any such entity not satisfying the conditions for practising mineral exploration must sign a contract with an organisation which does satisfy such conditions  
  • Have a mineral exploration proposal which is consistent with the mineral master planning (Mineral Exploration Proposal); and in the case of toxic minerals, must also have written permission from the PM
  • Have equity at least equal to 50% of the total investment capital to implement the Mineral

Exploration Proposal  

An application file for issuance of a mineral exploration license must comprise:  

  • Application for issuance of mineral exploration license  
  • Mineral Exploration Proposal  
  • Map of area to be explored  
  • Environmental protection undertaking in the case of any exploration of toxic minerals  
  • Copy business registration certificate; and in the case of a foreign enterprise, also a copy of the decision on establishment of the representative office or branch in Vietnam  
  • Certification of the required equity  
  • Confirmation that it has the winning bid in respect of an auction of the mining right to an unexplored area  

A mineral exploration license contains the following main particulars:

  • Name of the entity which will conduct the mineral exploration  
  • Kind of mineral, and location and measurements of the exploratory site  
  • Method and volume of exploration  
  • Duration of mineral exploration  
  • Financial obligations and other relevant obligations  

The duration of a mineral exploration license may not exceed 48 months and may be extended provided that the total duration of any such extensions do not exceed 48 months (the total time of such duration and its extensions, if any, is called the “Exploration Duration”); and on each subsequent extension, the entity conducting the exploration must surrender at least 30% of the exploratory site stipulated in the issued license.  

The term of mineral exploration will comprise the time required to (i) implement the mineral exploration proposal, (ii) submit the mineral reserves for approval and (iii) formulate the investment project for mining the minerals. If the right to conduct the mineral exploration is transferred to another entity, then the duration for exploration will be the residual duration of the previously issued mineral exploration license.  

Within the Exploration Duration, a mining investment project (if any) must be formulated. An investment certificate for the project (Investment Certificate) must be obtained and included in the application file for a mineral mining license.  

An entity which has conducted mineral exploration in an area which is not subject to an auction process (e.g. of mineral mining rights) will be given priority to mine the site, for a period of six months from the expiry date of the mineral exploration license. If the entity (which has conducted the site exploration) has not, upon expiry of the period of priority, requested issuance of a mining license for the explored area, then it will lose the priority for issuance of a mineral mining license.  

If the licensing body issues a mining license to another entity (e.g. other than the entity which initially conducted the mineral exploration), then that entity must refund the exploration costs in respect of the permitted reserves to the entity which initially conducted the exploration, prior to issuance of the mineral mining license.  

Mineral explorers may obtain a maximum of five licenses for mineral exploration. They must have technical personnel and workers who are trained in exploration geology, hydrogeology-engineering geology, geophysics, boring, excavation and other relevant expertise. They are also required to have specialised equipment and tools for the implementation of mineral exploration works.

MINERAL MINING LICENSES  

Entities registered for the business line of mining minerals will be eligible to conduct mineral mining, comprising:  

  • Enterprises established in accordance with the Law on Enterprises  
  • Co-operatives and unions of co-operatives established in accordance with the Law on Co-operatives  

Family businesses which are registered to undertake the mining of minerals will be eligible to mine minerals used as common construction materials and to conduct individual mineral mining.  

An entity must satisfy all of the following conditions in order to be granted a mineral mining license:  

  • Have a mineral mining investment project for an area which has already been explored and for which the mineral reserves have been approved in accordance with the master planning. The mineral mining investment project must contain a plan on employing specialised manpower, on using equipment and technology, and contain an appropriate technologically advanced progressive mining plan; and there must also be written permission from the PM in the case of toxic minerals  
  • Have an environmental impact assessment report or an environmental protection undertaking in accordance with legislation on environmental protection  
  • Have equity at least equal to 30% of the total investment capital of the mineral mining project

An application file for issuance of a mineral mining license comprises:  

  • Application for issuance of mineral mining license  
  • Map of area to be mined  
  • Decision of the competent State body approving the mineral reserves  
  • Mineral mining investment project enclosing approval decision and copy Investment Certificate  
  • Environmental impact assessment report or environmental protection undertaking  
  • Copy business registration certificate  
  • Confirmation of the successful auction where the mining right is obtained through auction  
  • Certification of the required equity  

A mineral mining license will contain the following main particulars:  

  • Name of the entity which will conduct the mineral mining  
  • Kind of minerals, and location and measurements of the mining site  
  • Reserves, output and method of mineral mining  
  • Duration of mineral mining  
  • Financial obligations and other relevant obligations  

A mineral mining license may not be granted for more than 30 years but may be extended on several occasions provided that the aggregate total duration of such extensions does not exceed 20 years.  

If the right to conduct mineral mining is transferred to another entity, then the duration for mining will be the residual duration of the previously issued mineral mining license.

Protection of interests of locality and people in locality where minerals are mined

The State will appropriate revenue from mineral mining activities in localities in which minerals are mined to assist socio-economic development.  

Entities mining minerals will be responsible for:  

  • Assisting with the costs of investment in upgrading, maintaining and building technical infrastructure used for mining minerals and for building welfare works for the locality where minerals are mined in accordance with law  
  • Combining mineral mining with construction of technical infrastructure and protection and rehabilitation of the environment in accordance with the investment project for mineral mining; and if an entity causes loss or damage to technical infrastructure, building works or assets then depending on the amount of such loss, it will be liable to carry out repairs, maintenance or new construction or pay compensation in accordance with law  
  • Giving priority to local people when recruiting labour for mineral activities and hiring related services  
  • Ensuring, jointly with local authorities, conversion of trades or occupations for people whose land is recovered for mineral mining  

Payment of compensation and assistance and resettlement of any entity currently using land which is recovered for implementation of a mineral mining project will be conducted in accordance with legislation on land and other relevant laws.  

Responsibilities for State administration of minerals  

The Government will exercise uniform State administration of minerals. The MONRE will be authorised by the Government to exercise State administration of minerals throughout the whole country. Other State regulators include other ministries and People’s Committees of all levels.  

Transitional provision  

Any entity issued with a mineral exploration license or mineral mining license prior to the Effective Date will be permitted to continue to implement such license until expiry of its duration as prescribed in such license.  

As from the Effective Date, any entity currently conducting activities in accordance with a mining license issued prior to the Effective Date must pay fees for issuance of the mineral mining right to that part of the mineral reserves which have not yet been mined.  

Implementing legal instruments to be issued  

On 25 February 2011, the PM signed Decision No. 299/QD-TTg with immediate effect promulgating the list of implementing legal instruments to be issued for laws passed in 2010 and delegation of authority for drafting and submitting such legal instruments. The MONRE is delegated to draft the following legal instruments:  

  • Decree Implementing the Law on Minerals for submission in May 2011  
  • Decree Regulating Auctions of Mineral Mining Rights for submission in May 2011  
  • Decree on Administrative Penalties in the Mineral Sector for submission in September 2011 and  
  • Decision of the PM approving the Mineral Strategy to Year 2020 with Outlook to Year 2030 for submission in May 2011