JOINT-CIRCULAR

DETAILING A NUMBER OF ARTICLES DEFINED IN GOVERNMENTAL DECREE NO. 22/2012/NĐ-CP DATED 26 MARCH 2012 REGULATING AUCTION OF MINING RIGHTS

Pursuant to the Law on Minerals No. 60/2010/QH12 dated November 17, 2010;

Pursuant to governmental Decree No. 22/2012/ND-CP dated 26 March 2012 regulating the auction of mining rights;

Pursuant to governmental Decree No. 203/2013/ND-CP dated 28 November 2013 regulating the calculation and rates of charge for mining right licensing;

Pursuant to governmental Decree No. 57/2002/ND-CP dated 3 June 2012 detailing the implementation of the Ordinance on Fees and Charges, amended and supplemented as per Decree No. 24/2006/NĐ-CP dated 6 March 2012;

Pursuant to governmental Decree No. 21/2013/ND-CP dated 4 March 2013 regulating the functions, duties, entitlements and organizational structure of the Ministry of Natural Resources and Environment [referred to as “MONRE”];

Pursuant to governmental Decree No. 215/2013/ND-CP dated 23 December 2013 regulating the functions, duties, entitlements and organizational structure of the Ministry of Finance;

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Chapter I

GENERAL REGULATIONS

Article 1. Governing scope and regulated entities      

1. This joint-Circular details the implementation of Clause 3 of Article 4; Clause 3 of Article 16; Clause 2 of Article 24; Clause 3 of Article 25 of governmental Decree No. 22/2012/ND-CP dated 26 March 2012 which regulates the auction of mining rights (hereafter referred to as “Decree No. 22/2012/ND-CP”).

2. The entities governed by this joint-Circular include:

a) Mineral authorities who are assigned the duties related to auction of mining rights;

b) The Council for mining right auction [referred to as “Auction Council”] established in accordance with Clauses 1 and 2 of Article 12 of Decree No. 22/2012/ND-CP;

c) Entities eligible to bid for mining rights (hereinafter referred to as “bidders”) according to the related legal regulations;

d) The organizations and/or individuals involving in mining right auction.

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The terms herein and hereunder are interpreted as follows:

1. Start price for the areas with available mineral survey results (hereinafter referred to as “surveyed areas”) means the price offered to bid for the mining right, expressed in Vietnam dong.

2. Start price for the areas without mineral survey results (hereinafter referred to as “unsurveyed areas”) means the rate of charge for mining right licensing, expressed in percentage (%).

3. Bid increment means the difference between a bid price and the immediately previous bid price.

Chapter II

DETERMINATION OF START PRICE, BID INCREMENT, CALCULATION METHOD, COLLECTION AND MANAGEMENT OF THE HAMMER PRICE FOR THE MINING RIGHT

Article 3. Determining the start price of a mining right auction session

1. With regard to the surveyed area, the start price of an auction session is equal to the charge for mining right licensing as defined in Article 5 of governmental Decree No. 203/2013/ND-CP dated 28 November 2013 regulating the calculation and rates of charge for mining right licensing (hereafter referred to as “Decree No. 203/2013/ND-CP”).

2. With regard to the unsurveyed area, the start price of an auction session is equal to the rate of charge for mining right licensing (R) as defined in Appendix I of Decree No. 203/2013/ND-CP.

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Article 4. Bid increment

1. Bid increment shall be determined as follows:

a) Bid increment for a surveyed area is expressed in Vietnam dong;

b) Bid increment for an unsurveyed area is subject to the rate of charge for mining right licensing.

2. Decentralization on bid increment decision:

a) The Auction Council as defined in Article 12 of Decree No. 22/2012/ND-CP shall decide the bid increment for every auction session;

b) In case the auction is organized by a professional organization auctioneer as defined in Clause 2 of Article 12 of Decree No. 22/2012/ND-CP, the DONRE shall decide the bid increment for every auction session and submit it to the provincial People’s Committee for approval.

Article 5. Bid placement

1. In the first round of an auction session for mining right, the lowest bid placed by organization, individual bidders shall equal the start price plus an integer time of the bid increment (1, 2,…. n times)

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3. Any bid form inconformity with the regulations defined in Clauses 01 and 2 of this Article shall be considered illegitimate.

Article 6. Calculation of the hammer price of a mining right auction for the unsurveyed areas

1. Based on the successful bid for/hammer price for grant of mining right which is approved by a competent authority, the hammer price is calculated as follows:

T = Q x G x K x R_đg (VND)

Where:

T - Hammer price of a mining right auction; in Vietnam dong;

Q - Mineral reserves of the auctioned mining site approved by the competent authorities; calculated in tonne, m³;

G- The price based on which the mining right licensing charge is calculated as prescribed in Decree No. 203/2013/ND-CP; expressed in Vietnam dong/unit of reserves;

K - Mineral recovery index related to the mining method: K = 0.9; K = 0.6 and K = 1.0 for open mining, tunnel mining and mineral water, natural hot water, other mining cases respectively.

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2. Payable rate for mining right licensing of a successful auction, approved by the competent governmental authorities, shall remain unchanged throughout the effective period of the mining license.

3. General Department of Geology and Minerals of Vietnam, DONRE shall decide and request approval on the hammer price of a mining right auction in unsurveyed areas, in accordance with their respective licensing decentralization as defined in Clauses 1 and 2 of Article 82 of the Law on Minerals.

Article 7. Collection of the mining right hammer prices

1. Mining right hammer price shall be collected in a lump sum before the mining license is issued, unless otherwise defined in Clause 2 of this Article.

2. In case the mining right hammer price is over 50 million Vietnam dongs, such amount shall be paid by installments, provided that the following regulations are complied with:

a) The successful organization, individual bidder shall pay the first installment of at least 50 billion Vietnam dongs before being granted the mining license; the remaining amount shall be paid by installments (before March 31^st of the due payment year). The payment period shall not be longer than 5 (five) years since the issuance date of the mining License;

b) In case the mining period is shorter than 10 years, the installment period shall not be more than half of the license validity period;

c) In case the price subject to severance tax by the payment time is higher than that by the time the auction hammer price is specified, the payable hammer price shall be re-calculated based on the principle defined in Point b of Clause 2 of Article 11, Decree No. 203/2013/ND-CP;

d) The number of installment and payment period must be indicated in the bidding document, decided by the Auction Committee and clearly noted in the mining License.

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In case the mining site covers two provinces/districts or more, the percentage of payment to each local fund shall be calculated in proportion to the area percentage licensed for mining in each locality.

4. Prior to licensing, the General Department of Geology and Minerals of Vietnam, DONRE shall notify the provincial, city Tax Department, under central management (hereafter referred to as the “local Tax Department”), where the mining site is located, of the number of installment and payment time of the auction hammer price to be made by the organization/ individual miners.

5. Within 10 (ten) days from the receipt of the written notification from the General Department of Geology and Mineral of Vietnam, DONRE; the local Tax Department of the area where the mineral auction takes place shall request the successful organization, individual bidder to transfer the payment to the state fund in accordance with tax management regulations.

6. In case of installment payment, written notification on the amount of the next installment shall be notified by the General Department of Geology and Mineral of Vietnam, DONRE to the local Tax Department 10 days before the payment day in accordance to related regulation, so that the successful organization/ individual bidder is informed to make payment to the state fund.

Article 8. Method of hammer price payment

1. Successful organization/ individual bidder of the mining right auction shall make payment to the state fund as notified by the tax authority. The payment grace period of hammer price of a mining right auction shall conform to related regulation, which is not included in the processing time for mining right Licensing as defined in Point a of Clause 2 of Article 60, Law on Minerals.

2. The receipt of hammer price payment for a mining right auction to be made to the state fund, issued by the State Treasury or an authorized organization, shall be made in 3 (three) copies, of which:

a) 01 (one) copy is for the successful organization/ individual bidder;

b) The other is for the General Department of Geology and Mineral of Vietnam, DONRE in accordance with their licensing decentralization, for supervision purpose;

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3. In case an organization and/or individual fails to make the payment by the deadline notified by the tax authority, the local Tax Department of such area where the auction has taken place shall verify and notify the delayed payment in conformity with the tax management regulation; such notification shall simultaneously be copied to the General Department of Geology and Mineral of Vietnam, DONRE for their intra vires supervision.

4. During the mining, in case the Mining License of a successful organization, individual bidder of a mining right auction is revoked due to legal offence, the paid hammer price shall not be refunded.

Article 9. Templates, documents required in a mining right auction

The templates, documents to be used in a mining right auction shall be as stated in the Appendix attached herewith, including:

1. Template request for participating in the mining right auction: Form No. 01

2. Company and/or personal profile template stating the qualifications, experiences on mineral exploration, mining and processing: Form No. 02

3. The template on performance guarantee in case of mining license awarding: Form No. 03

4. Deposit payment template (or auction guarantee): Form No. 04

5. Deposit refund template (or auction guarantee): Form No. 05

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7. Decision template acknowledging the result of a mining right auction applicable to the areas managed by the MONRE: Form No. 07a

8. Decision template acknowledging the result of a mining right auction applicable to the areas managed by the provincial People’s Committees: Form No. 07b

9. Decision template canceling the result of a mining right auction applicable to the areas managed by the MONRE: Form No. 08a

10. Decision template canceling the result of a mining right auction applicable to the areas managed by the provincial People’s Committees: Form No. 08b

11. Decision template approving the hammer price of a mining right auction applicable to the areas managed by the MONRE (surveyed areas): Form No. 09a

12. Decision template approving the hammer price of a mining right auction applicable to the areas managed by the provincial People’s Committee (surveyed areas): Form No. 09b

13. Notification template regarding the payable hammer price of a mining right auction: Form No. 10

14. Notification template requesting for the payment of the hammer price of a mining right auction: Form No. 11

15. Report template regarding the organization and/or activities of a mining right auction to be used by the provincial People’s Committees: Form No. 12

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FINANCIAL POLICY APPLIED TO MINING RIGHT AUCTIONS

Article 10. Fund source

The fund to run the mining right auctions comes from:

1. Estimated state funds allocated to the General Department of Geology and Mineral of Vietnam, DONRE.

2. Auction fees collected from participating organization/ individual bidders as defined in Article 11 herein.

3. Other legitimate funds as regulated by related laws.

Article 11. Fee rates for participating in a mining right auction

1. Participation fee rates applied to mining license auctions in the areas managed by the MONRE are as follows:

a) In surveyed areas:

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Maximum fee
(VND/application)

VND 01 billion and less

2,000,000

Over VND 01 billion to VND 5 billion

4,000,000

Over VND 5 billion to VND 10 billion

6,000,000

Over VND 10 billion to VND 50 billion

8,000,000

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10,000,000

Over VND 100 billion

12,000,000

b) In unsurveyed areas:

Mining site area

Maximum fee
(VND/application)

0.5 ha or less

2,000,000

Over 0.5 ha to 2 ha

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Over 2 ha to 5 ha

6,000,000

Over 5 ha to 10 ha

8,000,000

Over 10 ha to 50 ha

10,000,000

Over 5 ha or more

12,000,000

2. In case the mining site is within the competence of a provincial People’s Committee, the corresponding People’s Council of such province shall decide the participation fee of a mining license auction, which shall not exceed the regulated rates defined in Clause 1 of this Article, depending on the particular conditions of the province.

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Article 12. Expenditures and limits of expenditure

1. Expenditures:

a) The expenditures entitled to the General Department of Geology and Mineral of Vietnam, DONRE include:

- Cost of planning mining right auctions;

- Costs for data, information collection and processing to prepare the bidding documents of the mining right auctions; site survey costs related to the mining areas;

- Costs for organizing Q&A workshops while inviting organizations and/or individuals to the auctions (if any).

b) The expenditures for mining right auctioning activities in case a professional auctioneer is employed to carry out a mining right auction, which include service fees payable to the professional auctioneer for their organization of the auction, starting from the auction service contracting date.

c) The expenditures for mining right auctioning activities in case of the involvement of an Auction Council, which include the costs for organizing of an auction, specifically as follows:

- Cost for public posting and/or notification;

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- Cost payable to a professional auctioneer for their arrangement of the bid catchers to run an action;

- Costs for document printing, Photostatting and stationeries related to auction preparation;

- Costs for participating into an auction, overtime allowances payable to the Auction Council’s members;

- Other expenditures related directly to the organization of a mining right auction.

2. Limits of expenditure:

a) The expenditure limits and payment way applicable to the expenditures defined in Clause 01 of this Article shall conform to the current regulations promulgated by the competent governmental authorities.

b) The expenditures without regulated limits, standards, unit costs decided by the competent governmental authorities shall be decided by the MONRE, provincial People’s Committees provided that they shall conform to the current governmental financial management policy and the related authorities shall be liable to their decisions.

Article 13. Cost estimate preparation, fund use and cost balance

Based on the collectibles, expenditures, expenditure limits defined in Articles 11 and 12 herein, the General Department of Geology and Mineral of Vietnam, DONRE shall prepare the cost estimate for the organization of a mining right auction to submit to the competent authorities for approval in accordance with the laws on state fund.

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IMPLEMENTATION RESPONSIBILITIES AND VALIDITY

Article 14. Implementation

1. The General Department of Geology and Mineral of Vietnam is responsible for the development of the mining right auctions related to the mining areas under the licensing authority of the MONRE as defined in Clause 01 of Article 82 of the Law on Minerals.

2. The provincial People’s Committees are responsible for the development of the mining right auctions related to the areas under their licensing authority as defined in Clause 2 of Article 82 of the Law on Minerals; instructing the specialized affiliate agencies to prepare the land acquisition plans after being notified by the competent governmental agencies on the results of the mining right auctions.

3. The organizations and/or individuals participating in mining right auctions are responsible to carry out their rights and obligations as defined in Decree No. 22/2012/ND-CP and this Circular.

4. The successful organization/ individual bidders of mining right auctions are responsible for making full and timely payment of the hammer prices.

Article 15. Implementation validity

1. This Circular takes effect as of 24 October 2014.

2. During the implementation, in case of any arising issues, entanglements, related organizations and/or individuals are requested to report timely to the MONRE, Ministry of Finance for consideration and/or guidance./.

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P.P. MINISTER OF FINANCE
VICE MINISTER




Nguyen Huu Chi

P.P. MINISTER OF NATURAL RESOURCES & ENVIRONMENT
 



Tran Hong Ha