JOINT CIRCULAR No. 126/1999/TTLT/BTC-BCN-BKHCNMT GUIDING THE DEPOSIT FOR ENVIRONMENTAL RESTORATION IN MINERAL EXPLORATION AND EXTRACTION

 JOINT CIRCULAR

Guidelines on depositing funds for environmental restoration during mineral exploitation

Pursuant to the Law on Minerals dated March 20, 1996;

On the basis of the Environmental Protection Law dated December 27, 1993;

Pursuant to Decree No. 68/CP dated November 1, 1996 of the Government detailing the implementation of the Law on Minerals;

The Ministry of Finance, the Ministry of Industry, and the Ministry of Science and Technology and Environment hereby issue guidelines on depositing funds for environmental restoration during mineral exploitation as follows:

I. OBJECTS AND PURPOSES OF THE DEPOSIT

1.- Objects required to make deposits: Organizations and individuals permitted to exploit minerals (as stipulated in Article 15, Article 16 of Decree No. 68/CP dated November 1, 1996 of the Government) shall, prior to commencing mineral exploitation, deposit a sum of money or precious metals, precious stones, or other documents valued in monetary terms (hereinafter referred to collectively as "money") into a blocked account at a Vietnamese credit institution or a foreign credit institution operating in Vietnam (collectively referred to as "credit institutions") to ensure compliance with the obligation to restore the environment caused by mineral exploitation activities.

2.- Purpose of the deposit: Depositing a sum of money into a blocked account at a credit institution to ensure compliance with the obligation to restore the environment caused by mineral exploitation activities in accordance with the laws governing mineral activities and the guidelines set forth in this Circular.

II. BASIS AND METHODS FOR DETERMINING THE AMOUNT OF THE DEPOSIT

1.- Basis for determining the amount of the deposit: The amount of the deposit is determined based on the total estimated cost of environmental restoration, the duration of exploitation according to the feasibility study report, mine design, and environmental impact assessment report which have been reviewed and approved by competent state agencies; and the validity period of the mining permit.

2.- Method for determining the amount of the deposit:

a) In case of a single deposit: For cases where the duration of exploitation according to the feasibility study report on mineral exploitation is less than three years, a single deposit must be made. The amount of the deposit shall be equal to 100% of the total estimated cost of environmental restoration according to the feasibility study report, mine design, and environmental impact assessment report (excluding the budget for production technology plans and environmental treatment measures implemented during the exploitation process by the entity) which have been reviewed and approved by competent state agencies.

b) In case of multiple deposits:

b.1. For cases where the duration of exploitation according to the feasibility study report on mineral exploitation is three years or more, multiple deposits may be made.

b.2. The amount of the deposit (denoted as A) is determined based on the duration of exploitation according to the feasibility study report, the duration of exploitation according to the mining permit issued, and the total estimated cost of environmental restoration according to the feasibility study report, mine design, and environmental impact assessment report which have been reviewed and approved by competent state agencies, calculated using the following formula:

Of which:

A: The amount of the deposit for an entity permitted to exploit minerals (Vietnamese dong).

Tg: The duration of exploitation according to the mining permit issued (years).

Tb: The duration of exploitation according to the feasibility study report, mine design, and environmental impact assessment report which have been reviewed and approved by competent state agencies (years).Mcp: The total estimated cost of environmental restoration according to the feasibility study report, mine design, and environmental impact assessment report (excluding the budget for production technology plans and environmental treatment measures implemented during the exploitation process by the entity) which have been reviewed and approved by competent state agencies (Vietnamese dong).

b.3. The initial amount of the deposit (denoted as B) for each case is as follows:

b.3.1. For projects with a duration of exploitation according to the mining permit issued (Tg) under ten years, the initial deposit amount shall be 25% of the total deposit amount (A) determined by the above formula.

b.3.2. For projects with a duration of exploitation according to the mining permit issued (Tg) from ten to under twenty years, the initial deposit amount shall be 20% of the total deposit amount (A) determined by the above formula.

b.3.3. For projects with a duration of exploitation according to the mining permit issued (Tg) twenty years or more, the initial deposit amount shall be 15% of the total deposit amount (A) determined by the above formula.

b.4. The subsequent amounts of the deposit (denoted as C) are based on the remaining amount of the deposit and the duration of exploitation according to the mining permit issued, calculated using the following formula:

(A - B)

c.1. If the exploitation activity within the extended or supplemented period does not cause adverse effects on the environment due to insufficient capacity and has been agreed upon by the state management agency responsible for environmental protection, no further deposit is required.

c.2. If the exploitation activity within the extended or supplemented period causes adverse effects on the environment, a single deposit must be made according to the total estimated cost of environmental restoration caused by the extended or supplemented exploitation activity, which has been reviewed and approved by competent state agencies.

3.- Time for making the deposit:

a) For cases of a single deposit and the initial deposit in cases of multiple deposits: The deposit must be completed before the date on which the organization or individual permitted to exploit minerals begins the exploitation activity as registered with the competent state agency in accordance with the Mineral Law and its implementing regulations.

a) In the case of a single deposit guarantee and the initial deposit guarantee for cases requiring multiple deposits: The deposit guarantee must be completed before the date on which the organization or individual permitted to extract minerals commences their mineral extraction activities, as registered with the competent state agency in accordance with the Minerals Law and the guiding documents for its implementation.

b) In cases of multiple deposits (from the second deposit onwards): The deposit must be made annually (no later than December 31 each year), from the date of registration for commencement of mineral exploitation activities until the end of the exploitation period specified in the exploitation permit. Subjects permitted to make multiple deposits may choose to make a single deposit covering the entire exploitation period as specified in the mineral exploitation permit.

c) In cases of extended or supplemented exploitation periods: The deposit must be completed within fifteen days from the date of receipt of the approval permit issued by the competent authority authorizing the extension of the exploitation period.

III. PROCEDURES AND DEPOSIT FORMALITIES

1.- Immediately upon issuance of the mineral exploitation permit, the issuing authority must issue a notice requiring the permit holder to deposit at a credit institution as stipulated in this Circular.

2.- Within thirty days from the date of receipt of the deposit notice, the permit holder must complete the deposit at a credit institution and notify in writing the following authorities:

- People's Committee of the province or centrally-administered city where the exploitation activities will take place;

- Ministry of Industry (Vietnam Geological Survey);

- Ministry of Science, Technology and Environment (Environmental Protection Agency).

3.- The depositor is responsible for paying all service fees related to the deposit at the credit institution according to the laws governing the operations of credit institutions.

4.- All procedures for depositing at a credit institution shall be carried out in accordance with the guidelines of the credit institution and must comply with the laws governing the operations of credit institutions regarding deposit activities.

5.- The deposit amount shall be paid, settled, and recorded in Vietnamese Dong. In case of deposit in foreign currency, it shall be converted into Vietnamese Dong according to the regulations of the credit institution.

IV. MANAGEMENT AND USE OF THE DEPOSIT FUNDS

1.- The authority responsible for issuing, extending, supplementing, and revoking mineral exploitation permits (as stipulated in Article 9 of Decree No. 68/CP dated November 1, 1996 of the Government) has the authority and responsibility:

- To monitor, urge, and inspect the implementation of deposits by organizations and individuals exploiting minerals according to the guidelines of this Circular;

- To approve organizations and individuals to withdraw funds from the deposit to carry out environmental restoration according to the guidelines of this Circular;

- To decide on the refund of unused deposit funds to depositors according to the laws on minerals, environmental protection, and the guidelines of this Circular.

2.- The state management agency for environmental protection is responsible for reviewing and confirming:

- Cases of extended or supplemented exploitation periods where exploitation activities do not adversely affect the environment;

- Organizations and individuals who have completed environmental restoration.

3.- Depositors have the right to withdraw deposit funds when they have completed their obligation to restore the environment and have been reviewed and confirmed by the state management agency for environmental protection.

4.- In cases where depositors exploit minerals but fail to restore the environment, or in cases of bankruptcy or dissolution, the competent authority (as stipulated in Article 9 of Decree No. 68/CP dated November 1, 1996 of the Government) decides to use the deposit funds to restore the environment and selects (through bidding) the entity to carry out environmental restoration using these deposit funds. The use of deposit funds must ensure compliance with the purpose, content, volume of work, and budgeted costs for environmental restoration approved by the competent state authority. If the deposit funds for environmental restoration are not fully utilized, they shall be refunded to the depositor; if the depositor has been dissolved or declared bankrupt, the remaining funds shall be fully remitted to the State Budget according to the laws on management and disposal of assets when there is a decision to confiscate and transfer to the State Treasury and establish State ownership rights. The use of deposit funds must be audited and settled according to current financial laws.

V. IMPLEMENTATION

1.- The Vietnam Geological Survey, Provincial Departments of Industry, Provincial Departments of Science, Technology and Environment, and Provincial Financial Departments have the responsibility to assist the Minister of Industry, the Minister of Science, Technology and Environment, the Minister of Finance, and the Chairman of the People's Committee of the province or centrally-administered city in implementing the tasks stipulated in this Circular.

2.- Credit institutions where depositors deposit to guarantee environmental restoration as stipulated in this Circular are allowed to charge service fees for deposits according to the laws governing the operations of credit institutions and are responsible for:

- Carrying out deposit procedures such as receiving deposit payments, opening blocked accounts for deposit amounts, providing written confirmation of deposits to depositors, retaining relevant deposit documents, settling deposit payments... according to the laws governing the operations of credit institutions and finance, and this Circular.

- Paying deposit funds to entities authorized to withdraw deposit funds according to this Circular.

3.- Subjects required to deposit under this Circular who fail to make the deposit will not be permitted to commence mineral exploitation activities or will have their mineral exploitation permits revoked according to the laws on mineral activities.

4.- Subjects returning or having their permits revoked must fulfill their deposit obligations as stipulated in this Circular until the return or revocation of the permit. The refund of unused deposit funds for environmental restoration for these subjects will be implemented after confirmation of completion of environmental restoration or after formal settlement of environmental restoration costs caused by their mineral exploitation activities.

5. The competent state agency responsible for reviewing and approving the environmental impact assessment report must coordinate with the Ministry of Finance or the Department of Finance (if the agency reviewing and approving the environmental impact assessment report is a provincial-level state management agency) to review and approve the budget for environmental recovery costs in the environmental impact assessment report. In cases where the environmental impact assessment report does not include a budget for environmental recovery costs, the competent state agency responsible for reviewing and approving the environmental impact assessment report shall be responsible for requiring the entity requesting the review of the environmental impact assessment report to supplement this content. The financial agency and the agency approving the environmental impact assessment report shall be responsible for coordinating the management and implementation of inspections and final accounts of the amount of deposit used.

6. All inspection, supervision, commendation, and penalty procedures for violations of the provisions of this Circular shall be implemented in accordance with current laws.

7. This Circular takes effect fifteen days from the date of signature. Entities that have been granted mining exploitation permits before this Circular takes effect, and whose permits are still valid and who have the obligation to restore the environment caused by mining activities, must also implement the deposit requirement as stipulated in this Circular. Any previous regulations issued by the Ministry of Finance, the Ministry of Industry, the Ministry of Science, Technology, and Environment that conflict with this Circular are hereby abolished. During the implementation process, if there are any difficulties, relevant units are requested to directly reflect them to the Joint Ministries of Finance, Industry, Science, Technology, and Environment for study and supplementation.