From July 1, 2011 businesses and individuals will be required to join auctions if they want to do business in the mining field. VIR spoke with deputy chief of office at the Ministry of Natural Resources and Environment (MoNRE) Lai Hong Thanh to shed some light on the new regulation.

How can transparency in mining projects’ state auctions be achieved?

Besides abiding by regulations at the Decree 17/2010/ND-CP dated March 4, 2010 on property auctions, the MoNRE intends to give out the initial auction price not in cash amount but in the percentage of extracted mineral volume businesses and individuals joining the auctions willingly to pay to state coffers under the principle that the winner will be those paying higher than the initial auction price and offering highest commissions to state coffers.

Does the regulation mean that the government and businesses are the beneficiaries in mining activities?

That is right. The state does not know the exact mineral deposit when auctions are held. Businesses will pay the state by the percentage of the extracted mineral volume as regulated in the signed contracts. They are also not required to pay immediately after the auctions, but payment will be made when mining activities are underway.

Without incentives will businesses willingly work in underprivileged areas?

The MoNRE plans to set the initial auction price under the principle that the price will be based on extracted mineral volume businesses and individuals undertake to pay the state to be multiplied with the mineral prices regulated by local people’s committees and a certain coefficient. That coefficient is based on mining conditions and socio-economic conditions in particular mining areas.

Are there initial starting prices for particular minerals auctioned?

The MoNRE sought comments from relevant ministries, departments and is sourcing the governmental approval.

Accordingly, we propose an initial auction price of 5 per cent of total extracted volume towards ferrous and non-ferrous metals. For non-metal minerals to be used as building materials or in gemstone or industrial production, perhaps the rate will be 5, 6 or 7 per cent, depending on each kind.

How will such auctions be handled effectively?

To ensure auction quality, the MoNRE will set strict regulations towards businesses qualifying to take part in the auctions.

Particularly, to become eligible to auctions technical managers at businesses joining the auctions must be bachelors of geological surveys with at least five years practical experience, having sound knowledge about exploration technical standards and businesses must have in their workforce specialised teams working in exploration, drilling, hydrological and mining geology and relevant areas.

Source: VIR