Strengthening state management in the field of auctioning mineral exploitation rights in Vietnam

Strengthening state management in the field of auctioning mineral exploitation rights in Vietnam (Image from the internet)

On October 24, 2024, the Ministry of Natural Resources and Environment of Vietnam issued Official Dispatch 7438/BTNMT-KSVN regarding the strengthening of state management in the field of auctioning mineral extraction rights in Vietnam.

Strengthening state management in the field of auctioning mineral exploitation rights in Vietnam

In recent times, the implementation of auctions for mineral extraction rights has shown positive developments, harnessing the potential value of minerals and significantly increasing revenues for the state budget of Vietnam.

However, auction results in some localities have shown abnormal factors such as: bid prices being placed through many bidding rounds, prolonged auction duration, and auction-winning prices surging abnormally (many times higher than the starting price, with instances where the auction-winning price alone exceeded several times the selling price of similar products in the market).

To ensure the effectiveness of auctions for mineral extraction rights, the Ministry of Natural Resources and Environment requests the People's Committees of provinces and centrally-affiliated cities in Vietnam to implement the following measures:

- Propagate and enhance the understanding and legal awareness of enterprises in the field of auctioning mineral extraction rights. Particularly, at auctions, it is crucial to fully disseminate relevant regulations to organizations and individuals participating in the auction to avoid misinterpretations that auctioning mineral extraction rights is the same as auctioning to buy mines; clarify for participating organizations and individuals that the auction-winning amount is only part of the obligations the enterprise must pay to the state budget for the right to extract minerals. For minerals to reach end-users, the extracting organization or individual must invest in executing the extraction project, which includes various costs such as extraction, processing, transportation, consumption, and they must also fulfill other related taxes and fees such as resource tax, environmental protection fees...

- Develop an auction plan suitable for the specific characteristics of the auction subject, which is the right to extract minerals, paying attention to choosing an appropriate auction format. In cases where the auction is conducted by direct voting at the auction, study the voting method and the number of auction rounds to avoid prolonged auctions that may psychologically impact participants, leading to bids much higher than their financial capacity and investment efficiency.

- Implement the process and procedures for auctioning mineral extraction rights in accordance with the Law on Asset Auctions 2016. Emphasize the step of preparing auction invitation dossiers and strictly selecting applicants. Only choose enterprises that have the capacity, experience, and complete dossiers with honest and clear information to participate in the auction.

- Direct relevant authorities to inspect auctions with abnormal signs, and firmly prevent and strictly handle cases where asset auction organizations, auctioneers, and participating organizations or individuals engage in violations affecting auction results. Strengthen inspections, checks, and monitoring of extraction output to ensure full fulfillment of obligations regarding extraction output, not allowing extraction beyond permitted reserves, particularly for sand and gravel mines in the area.

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