Vietnam Mining - Challlenges for Investors

International Resources, Funding Society Responses

Oliver Massmann reports that the Prime Minister Directive No.2/CT-TTg of January 2012 recognized that the mineral wealth of Vietnam is an important element for national industrialization and modernization and that the country minerals need to be mined and processed by advanced and environmentally friendly technology. The commitment to back investment in mining by modern, high technology which can be a key contributor to the economic growth of Vietnam and infrastructure development is welcomed by the Mining Working Group. Unfortunately, major foreign and strong local investment is unlikely to be forthcoming while Vietnam maintains one of the most investor-unfriendly mining legislation in the world, including the highest royalty rates and other taxes and fees which make even advanced and high technology mining not economically viable in the country.

EMERGING ISSUE - PROPOSAL TO INCREASE MINERAL ROYALTY TARIFFS EVEN HIGHER Resolution No.712/2013/UBTV-QH13 dated 16 December 2013 of the Standing Committee of the National Assembly promulgating the royalty tariff on minerals raised the royalty rates of a number of minerals by 1 to 5%. The new royalty rates applied to minerals such as wolfram (tungsten) 18%, antimony 18%, titanium 16%, copper 13%, iron 12%, manganese 11%, and nickel, cobalt, molybdenum, mercury, magnesium, vanadium and other metallic minerals at 10%. Minerals for which the royalty rates were not increased, but were already in the range of 10-15% were platinum, gold, silver, alumina and bauxite, tin, lead and zinc. These are the highest royalty rates in the world and are the single greatest dis-incentive for potential major investors wishing to come to Vietnam with advanced, high technology exploration and mining methods. For example, the royalty rate on gold averages 1-5% world-wide on the sales value of the metal produced compared with 15% applied in Vietnam.

Original URL: https://www.linkedin.com/pulse/lawyer-vietnam-oliver-massmann-mining-challenges-what-massmann?trk=prof-post