Iron ore exploitation at Trai Cau Iron Mine in Thai Nguyen Province.

VietNamNet Bridge – One of the major contents of a forum to promote investment into northwestern provinces, which will be held in Lao Cai province in October, is calling for investment in mining. The government recently issued a document asking provinces to clean up the investment environment for the mining industry.

Disorderly investment environment

The national forum on investment promotion in six northwestern provinces ought to have been held in late August in Lao Cai. However, the event was postponed because of the recent floods in these provinces.

For northwestern provinces, where are unattractive to investors because of their disadvantages in geography and infrastructure, only mining can help them take advantage of their advantages in natural resources and quickly earn profit.

On their list of top priority investment areas, and even the government’s list, mining is at the top.

For banks, for example the Bank for Investment and Development of Vietnam (BIDV), mining and hydro power projects are the top priorities among projects implemented in the northwestern region for arranging capital.

Yet, benefits from mining have lured investors to six northwestern provinces, not the above incentives. Going along with high profit are complications associated with formalities, management, licencing and other risks.

In some provinces, mining areas are so chaotic that the government has had to release instructions monthly to guide mining activities in these locations. The latest instruction was issued by the Prime Minister on September 1, requiring stricter management over mining, processing, use and export of minerals, to restore order in the mining field.

Though the Vietnamese Law on Minerals clearly clarifies management functions of natural resources and minerals from the central to grassroots levels, actually, each province carries out its own policy. This is the biggest reason for conflicts between investors and local authorities.

According to the Law on Minerals, large mines which are geologically surveyed are managed by the government through specialised ministries. The Quy Xa iron mine and Sinh Quyen bronze mine in Lao Cai province, and the Mau Due antimon mine in Ha Giang are of this kind.

Mines that have small reserves are managed by local authorities. There are large numbers of these mines in the northwestern region, but there are no official statistics about them.

Many problems associated with mining have arisen from provincial policies.

Related to licencing, the biggest case is Song Lo Co., Ltd’s lawsuit against the People’s Committee of Ha Giang province.

Song Lo is based in Ha Giang and was licenced by the local People’s Committee to exploit ore at Tung Ba mine in Vi Xuyen district and to build a metallurgy plant in early 2002. While the company was preparing for this project, the local People’s Committee (with a new chairman) licenced another company to exploit lead and zinc ore at Tung Ba mine.

The Ha Giang People’s Committee even twice released decisions to withdraw mining licences granted by the previous chairman. Consequently, Song Lo lost its project, and couldn’t repay bank loans. This firm sued the Ha Giang People’s Committee.

The Ha Giang People’s Court one year ago pronounced that the Ha Giang People’s Committee’s decision to withdraw mining licences granted by the former chairman was wrong. However, Song Lo and the People’s Committee still have yet to reach a settlement.

In Yen Bai province, surprisingly enough, mining licencing is conducted within 24 hours. On May 2, 2008, the Yen Bai Department of Natural Resources and the Environment received an application from the Phuc Tho Mining JS Company to exploit iron ore at Chang Re Mountain. On the same day, this department submitted the application to the provincial People’s Committee and it was approved immediately.

In Phu Tho province, local authorities gave the Thang Long Minerals and Metallurgy JS Company permission to exploit ore at a mine named Xom Vi, in Thuong Cuu commune, Thanh Son district; however, this place doesn’t exist.

This site has Xom Giuong mine, a national-level mine (around 34 million tonnes of ore). It is located in Phu Tho and neighbouring provinces, but this mine is managed by the government so provinces don’t have the right to licence mining in this mine. Phu Tho exceeded its authority and granted a licence to Thang Long Company anyway.

This is evidence of the chaos in granting mining licences in the northwestern region. If the government doesn’t take measures soon, the mining industry will suffer consequences.

How to avoid losses?

The above fact reveals the weak effects of state management in provinces though local officials understand the losses consequent of loose management.

Vice Chairman of the Lao Cai province People’s Committee, Pham Van Cuong, said: “Mineral resources are exhaustible, while many investors want to jump in this field, though management, planning and licencing is complicated.”

Chairman of the Phu Tho provincial People’s Committee Nguyen Doan Khanh expressed the same idea, saying that northwestern provinces are under great pressure from the high need for mining activities in their areas.

In his latest instruction dated September 1, Prime Minister Nguyen Tan Dung posed drastic requirements for provinces in managing mining activities to deal with the current chaos.

The investment environment for mining activities in provinces is being cleaned up before the forum to promote investment in six northwestern provinces.

(Source: TBKTSG)