Decree No. 22/2012/NĐ-CP on Auctioning Mineral Exploitation Rights

DECREE

Regulations on Auctioning Mineral Exploitation Rights

Pursuant to the Law on Organization of the Government dated December 25, 2001;

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

BASED ON Decree No. 17/2010/NĐ-CP dated March 4, 2010 of the Government on auctioning assets;

At the proposal of the Minister of Natural Resources and Environment;

The Government promulgates this Decree to regulate auctioning mineral exploitation rights,

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree provides detailed regulations for Clause 2, Article 79 of the Minerals Law No. 60/2010/QH12 dated November 17, 2010 of the National Assembly, concerning principles, conditions, and procedures for auctioning mineral exploitation rights.

Other relevant provisions during the auction process shall be implemented in accordance with the laws on auctioning assets.

In this Decree, the following terms are understood as follows:

1. Auctioning mineral exploitation rights is a form of public sale of mineral exploitation rights through a bidding process that increases prices according to the principles and procedures stipulated in this Decree.

2. Participants in the auction are legal representatives of organizations and individuals participating in the auction of mineral exploitation rights who meet the conditions prescribed in this Decree.

3. Bid security is a commitment from financial institutions guaranteeing the financial obligations of organizations and individuals participating in the auction of mineral exploitation rights.

Organizing the auction of mineral exploitation rights must ensure the following principles:

1. Transparency, openness, continuity, equality, and protection of the rights and legitimate interests of all parties involved in the auction.

3. Auctions of mineral exploitation rights can only take place in areas approved by competent state authorities for auction plans.

1. The starting price is determined by the competent state management agency issuing the Mining License as stipulated in Article 82 of the Minerals Law before organizing the auction.

2. The starting price in the auction of mineral exploitation rights must not be lower than the fee for granting mineral exploitation rights.

3. The Ministry of Natural Resources and Environment, in collaboration with the Ministry of Finance, shall specify the detailed procedures for determining the starting price in the auction of mineral exploitation rights.

1. Deposit money is the amount of money that organizations and individuals participating in the auction of mineral exploitation rights must pay before joining the auction session, calculated in Vietnamese dong. The deposit money is decided by the Auction Committee (hereinafter referred to as the Auction Committee) as follows:

a) For cases where the auction of mineral exploitation rights takes place in areas with existing mineral exploration results, the deposit money is between 1% and 15% of the starting price;

b) For cases where the auction of mineral exploitation rights takes place in areas without mineral exploration results, the deposit money is determined based on the results of mineral surveys and assessments and is calculated as in Point a of this Clause.

2. Organizations and individuals participating in the auction may pay the deposit money either in cash or through bid security as follows:

a) In the case of payment in cash, organizations and individuals participating in the auction must deposit the money into the temporary holding account of the agency receiving the auction application as stipulated in Article 17 of this Decree;

b) In the case of payment through bid security, organizations and individuals applying to participate in the auction must submit bid security to the agency receiving the auction application.

3. The deadline for paying the deposit money is announced in the invitation to bid for mineral exploitation rights at least seven days before organizing the auction session. The deposit money of the successful bidder in the auction of mineral exploitation rights must be deposited into the State Treasury and deducted from the auction winning price when issuing the Mining License.

2. Cases where the advance payment will not be refunded include:

a) Organizations and individuals who have been selected to participate in the auction session and paid the advance payment but did not participate in the auction session, except in cases of force majeure;

b) Organizations and individuals participating in the auction withdraw their bid;

c) Being the successful bidder but refusing to sign the auction session record;

d) Exceeding the time limit specified in Points b and c of Clause 2 of Article 11 of this Decree without submitting the application dossier for mineral exploration permit or mineral exploitation permit;

e) The mineral exploration permit being revoked according to the provisions of the law.

3. The advance payment that is not refunded in the cases stipulated in Clause 2 of this Article shall be deposited into the state budget.

1. Participation fees for the auction of mineral exploitation rights shall be implemented in accordance with the provisions of the law on fees and charges.

2. Costs related to preparing the auction invitation dossier; evaluating and selecting organizations and individuals participating in the auction session; costs for organizing the auction session by the Mineral Exploitation Rights Auction Council shall be carried out in accordance with the provisions of the law on public sale auctions.

Chapter II

ORGANIZATIONS AND INDIVIDUALS PARTICIPATING IN THE AUCTION

OF MINERAL EXPLOITATION RIGHTS

1. Organizations and individuals may participate in the auction session when meeting the following conditions:

a) They are organizations and individuals with the application dossier to participate in the auction session, which has been selected by the competent state agency according to the provisions of Article 19 of this Decree;

b) They have paid the participation fee and advance payment as prescribed.

2. In case there is a change in legal status, organizations and individuals participating in the auction session must submit additional relevant documents to the auction dossier receiving agency before conducting the auction session.

3. Organizations and individuals participating in the auction session and winning the mineral exploitation rights but refusing to accept the auction result without the approval of the Auction Council shall not be allowed to participate in any auction session within a period of 01 (one) year from the date of the end of that auction session.

1. Chairperson, members of the Auction Council; officials and civil servants assigned to receive and prepare the auction dossier for mineral exploitation rights of the General Department of Geology and Minerals, Provincial Department of Natural Resources and Environment where the auction area for mineral exploitation rights is located; parents, spouses, and children of the aforementioned persons.

2. Other prohibited subjects according to the provisions of the law on public sale auctions.

1. Organizations and individuals participating in the auction of mineral exploitation rights have the following rights:

a) To refer to geological and mineral-related materials concerning the auction area for mineral exploitation rights according to the provisions of the law on minerals and other related laws;

b) To conduct field surveys in the auction area for mineral exploitation rights, take surface samples within the auction area for mineral exploitation rights but have not yet conducted mineral exploration according to the provisions of Article 37 of the Law on Minerals;

c) To attend meetings related to the auction session organized by the competent state agency.

2. Organizations and individuals participating in the auction of mineral exploitation rights have the following obligations:

a) To strictly comply with the rules of the auction session, auction regulations issued by the Auction Council, and other relevant legal provisions;

b) To fulfill other obligations as prescribed by law.

1. Organizations and individuals winning the auction for mineral exploitation rights shall have the following rights:

a) To be issued a confirmation document for winning the auction for mineral exploitation rights;

b) To use information about minerals related to the area where they won the auction for mineral exploitation rights, in accordance with the laws on minerals.

c) To be granted a Mineral Exploration Permit and a Mineral Exploitation Permit after completing the procedures for requesting permission to operate mineral activities as prescribed by the laws on minerals;

d) To enjoy other rights as prescribed by law.

2. Organizations and individuals winning the auction for mineral exploitation rights shall have the following obligations:

a) To pay the auction winning fee as stipulated in Article 24 of this Decree and other financial obligations as prescribed by the laws;

b) Within six (6) months from the end date of the auction session, organizations and individuals winning the auction for mineral exploitation rights in areas that have not been explored for minerals must submit an application for a Mineral Exploration Permit to the competent state agency according to the laws on minerals;

c) Within twelve (12) months from the end date of the auction session, organizations and individuals winning the auction for mineral exploitation rights in areas that have exploration results for minerals must submit an application for a Mineral Exploitation Permit to the competent state agency according to the laws on minerals;

d) Not to transfer the auction winning result for mineral exploitation rights to other organizations or individuals to prepare applications for permission to operate mineral activities;

đ) To fulfill other obligations prescribed by law.

Chapter III

MINERAL EXPLOITATION RIGHTS AUCTION BOARD, AUCTION PROCEDURES AND FORMALITIES

PROCEDURE FOR AUCTIONING THE RIGHT TO EXPLOIT MINERALS

Section 1

MINERAL EXPLOITATION RIGHTS AUCTION BOARD

Article 12. Mineral Exploitation Rights Auction Board

1. For minerals under the licensing authority of the Ministry of Natural Resources and Environment, the Mineral Exploitation Rights Auction Board shall be established by the Minister of Natural Resources and Environment to organize the auction for mineral exploitation rights. The Auction Board shall consist of no more than eleven members, including:

c) The permanent body of the Auction Board of the Ministry of Natural Resources and Environment is the Geological Survey and Mineral Resources Administration.

2. For minerals under the licensing authority of the Provincial People's Committee, the auction for mineral exploitation rights shall be conducted by a professional auction organization. The permanent body preparing the dossier and documents before and after the auction session is the Department of Natural Resources and Environment.

In cases where the mine has a complex geological structure or when a professional auction organization cannot be hired, the Provincial People's Committee decides to establish an Auction Board to organize the auction for mineral exploitation rights. The composition of the Auction Board shall consist of no more than eleven members, including:

a) The Chairman of the Board is one leader of the Provincial People's Committee;

b) Members are representatives of leaders of the Departments of Natural Resources and Environment, Justice, Planning and Investment, Finance, Industry and Trade, Construction, the representative of the Department of Natural Resources and Environment serving as the Secretary of the Board, and the representative of the People's Committee of the district where the mineral area is being auctioned, and some experts in specialized fields;

c) The permanent body of the Auction Board of the Provincial People's Committee is the Department of Natural Resources and Environment.

1. The Auction Council for Mineral Exploitation Rights:

a) Rights:

- Enacts Auction Rules and bidding session regulations for mineral exploitation rights.

- Determines the bid deposit as stipulated in Article 5 of this Decree and the bidding increment at the auction session.

- Disqualifies participants from the auction session and prepares a record of handling for those who disrupt the order of the auction venue or engage in collusion, compromise to depress prices, or other actions that affect the objectivity and honesty of the auction session.

- Suspends or temporarily suspends the auction session for mineral exploitation rights upon discovering violations of the auction session procedures and formalities.

b) Responsibilities:

- Conducts the auction session in accordance with the provisions of this Decree and the Auction Council's Rules; bears responsibility for the honesty of the auction results before the law and competent state management agencies authorized to issue permits.

- Resolves complaints during the auction process; assists competent state management agencies authorized to issue permits in receiving and resolving complaints within their authority or recommending resolution of complaints arising after the auction session.

- Submits the auction results for mineral exploitation rights to the competent state management agency authorized to issue permits for approval.

- Performs other tasks as prescribed.

2. Professional Auction Organizations:

a) Rights:

- Requests the Department of Natural Resources and Environment to provide information on the auction area for mineral exploitation rights: files of organizations and individuals eligible to participate in the auction session; starting price.

- Requests the Department of Natural Resources and Environment to pay the costs of organizing the auction session for mineral exploitation rights.

b) Obligations:

- Organizes the auction session according to the principles and procedures specified in this Decree and bears responsibility for the results of the auction session.

- Provides the auction session record to the Department of Natural Resources and Environment.

- Compensates for damages caused by the auctioneer and other employees of the organization during the conduct of the auction session.

- Performs other obligations under the law on auctions.

Section 2

PROCEDURES FOR AUCTIONING MINERAL EXPLOITATION RIGHTS

1. Basis for preparing the auction plan for mineral exploitation rights:

a) Areas of mineral activities included in the mineral planning as stipulated in Points b, c, and Point d, Clause 1, Article 10 of the Minerals Law, which have been approved by competent state authorities;

b) Areas not subject to auctioning of mineral exploitation rights as stipulated in Clauses 3 and 4, Article 78 of the Minerals Law, which have been approved by competent authorities;

c) Results and actual conditions of mineral extraction and deep processing activities in local areas and nationwide; mineral needs for socio-economic development of localities, regions, and the country in the following year.

2. Responsibilities for preparing and approving the auction plan for mineral exploitation rights

In accordance with the authority to grant mineral exploitation permits as stipulated in Clauses 1 and 2, Article 82 of the Minerals Law; based on the provisions of Clause 1 of this Article, the General Directorate of Geology and Minerals prepares and submits annually to the Minister of Natural Resources and Environment; the Department of Natural Resources and Environment prepares and submits to the People's Committee of the province for approval the annual auction plan for mineral exploitation rights.

3. After approval, the list of areas with minerals put up for auction and the annual auction plan for mineral exploitation rights are announced and publicly posted on the website of the Ministry of Natural Resources and Environment, the People's Committee of the province, and centrally-administered cities where the minerals are located.

1. Based on the annual plan for bidding mineral exploitation rights that has been approved, the General Department of Geology and Minerals and the Department of Natural Resources and Environment shall prepare the documents for inviting bids on mineral exploitation rights.

2. The documents for inviting bids on mineral exploitation rights shall be prepared with the following main contents:

a) Name of the type of mineral, location of the area where the minerals to be auctioned are located;

b) Location, time of the planned auction session;

c) Basic information about geology and minerals; conditions for exploiting the area where the minerals to be auctioned are located; methods for obtaining relevant information and documents, current status of infrastructure and land use in the area where the minerals to be auctioned are located;

d) Starting price, bid deposit;

đ) Regulations on evaluation criteria for bidding participation documents;

e) Forms required in the bidding documents (application for bidding participation, basic economic-technical requirements, etc.).

3. In cases where bidding on mineral exploitation rights takes place in areas where there are already exploration results, the agency responsible for preparing the bidding invitation documents under Clause 1 of this Article shall attach to the documents a request for technology related to mining, deep processing, and utilization of minerals, including the following contents:

a) Methods, technological requirements, equipment for mining and processing minerals that must be achieved at a minimum level;

b) Minimum quality requirements for post-mining and processing minerals;

c) Purpose, address for using post-mining minerals to supply mineral processing projects already identified in the planning for exploitation and utilization of the same type of minerals, which have been approved by competent state authorities.

1. Organizations and individuals who wish to participate in bidding on mineral exploitation rights must prepare documents for applying to participate in bidding on mineral exploitation rights and submit them to the agency receiving bidding documents as stipulated in Article 17 of this Decree.

2. Documents and materials in the application for participating in bidding on mineral exploitation rights shall be prepared in one set according to the following provisions:

a) Original: Application for participation in bidding on mineral exploitation rights;

c) For areas where bidding takes place and there are already exploration results: Organizations and individuals participating in the bidding must have a preliminary investment program for mining, deep processing, product consumption, and a commitment to implement the project if they win the bidding;

d) For areas where bidding takes place and there are no exploration results: Organizations and individuals participating in the bidding must have a preliminary plan for investment in exploration, mining, deep processing, product consumption, and a commitment to implement if they win the bidding.

3. The Ministry of Natural Resources and Environment shall prescribe the format of the application form and other documents in the application for participating in bidding on mineral exploitation rights.

1. The agency receiving applications for participation in bidding on mineral exploitation rights shall be specified as follows:

b) The Department of Natural Resources and Environment is the agency responsible for preparing, announcing, and selling the documents for inviting bids on mineral exploitation rights, and simultaneously serves as the agency receiving applications for participation in bidding on mineral exploitation rights for minerals within the licensing authority of the provincial People's Committee.

2. Applications for participation in bidding on mineral exploitation rights shall be submitted directly to the agency receiving documents as stipulated in Clause 1 of this Article.

The time limit for receiving applications for participation in bidding on mineral exploitation rights is thirty (30) days, starting from the date of completion of the announcement of information about the bidding session on mineral exploitation rights as stipulated in Clause 1 of Article 18 of this Decree.

Article 18. Announcing and Publishing Information on Auction Sessions for Mineral Exploitation Rights

1. Based on the approved auction plan for mineral exploitation rights, the competent authority organizing the auction of mineral exploitation rights as stipulated in Article 12 of this Decree shall publicly announce information about the auction session for mineral exploitation rights at its office and publish it on the electronic information website of the licensing authority.

The announcement and publication of information must be continuous for 30 (days) before the start date of receiving auction registration documents. Information about the auction session for mineral exploitation rights must also be publicly published on central or local mass media in the area where the minerals are to be auctioned at least twice, with each publication separated by 3 (days).

2. Information about the auction session for mineral exploitation rights includes:

a) Name of the type of mineral, location of the area where the minerals to be auctioned are located;

b) Starting price, bid deposit;

c) Location and time of the auction session;

d) Date of starting to accept registration documents for participation in the auction.

e) Other related information.

Article 19. Selection of Registration Documents for Participation in Auction Sessions for Mineral Exploitation Rights

1. After the deadline for accepting registration documents for participating in the auction of mineral exploitation rights has expired, the agency receiving the auction registration documents will proceed to select the documents to choose organizations and individuals meeting the conditions to participate in the auction session.

If, after three announcements and up to the end of the deadline for inviting bids for the auction of mineral exploitation rights as stipulated in Clause 2 of Article 3 of this Decree, there are still not enough participants, the agency receiving the registration documents will report to the licensing authority and will not organize the auction session.

2. Organizations and individuals selected to participate in the auction session for mineral exploitation rights must meet the following requirements:

a) Having documents in the registration documents for participating in the auction of mineral exploitation rights established according to Clause 2 of Article 16 of this Decree;

b) Meeting the regulations for organizations and individuals conducting mineral exploration or mining as stipulated in Articles 34 and 51 of the Law on Minerals;

c) Committing to equipment, technology for mining and processing minerals, and sales plans that comply with the bidding invitation documents.

3. Within no more than 30 (days) from the expiration date of the deadline for submitting registration documents for participation in the auction, the agency receiving the auction registration documents must complete the selection plan for the registration documents of organizations and individuals proposing to participate in the auction session and report to the Chairman of the Auction Council.

In cases where the auction is conducted through a professional auction organization as stipulated in Clause 2 of Article 12 of this Decree, after the aforementioned deadline, the Department of Natural Resources and Environment will transfer the auction registration documents of the organizations and individuals selected to participate in the auction to the professional auction organization to conduct the auction in accordance with this Decree and the law on auctioning assets.

Within no more than 30 (days) from the date of receipt of the report on the results of the selection of registration documents for participation in the auction of mineral exploitation rights, the Chairman of the Auction Council or the professional auction organization must organize the auction session for mineral exploitation rights.

4. For registration documents for participation in the auction of mineral exploitation rights that are not selected, the agency receiving the registration documents must notify the relevant organizations and individuals in writing, clearly stating the reasons for non-selection.

5. The agency receiving the registration documents for the auction of mineral exploitation rights is responsible for publicly announcing the list of organizations and individuals participating in the auction session at its office and publishing it on the electronic information website of the licensing authority before proceeding with the auction session; notifying in writing the time and location of meetings to discuss information related to the auction session; the time for on-site survey of the auction area; and the time for paying participation fees and bid deposits for organizations and individuals participating in the auction session.

Section 3

CONDUCTING THE AUCTION SESSION FOR MINERAL EXPLOITATION RIGHTS

1. Prior to conducting the auction session, participants must present to the Auction Committee or the professional auction organization a letter introducing their organizational qualifications to participate in the auction session; present identification cards and receipts for paid auction participation fees; deposit money or provide a bid guarantee.

An organization participating in the auction may only send up to three representatives to the auction session, including one representative authorized to bid.

2. During the auction session, participants must comply with the following regulations:

a) Only exchange information within their own organization and not with other organizations or individuals;

b) Not use communication devices throughout the entire auction session;

c) Not engage in behavior that disrupts order, obstructs, or interferes with the auction session, or infringes upon the legitimate rights of other organizations or individuals participating in the auction session;

d) Not bribe to eliminate other bidders or collude to suppress prices.

3. In case a participant violates any of the provisions in Clause 2 of this Article, the Chairman of the Auction Committee or the auction session manager has the right to temporarily suspend the auction session, record the violation, and resume the auction session only after the violation has been addressed according to regulations.

1. At the beginning, the Auction Committee secretary introduces the members of the Auction Committee and representatives from related agencies or organizations; disseminates the rules of the auction session; announces the list of organizations and individuals eligible to participate in the auction session; takes attendance of bidders and price announcers; answers questions (if any).

2. The Chairman of the Auction Committee or the auction session manager conducts the auction session through a direct sealed-bid process, continuously without interruption throughout the session. The auction session concludes only after the successful bidder for mineral exploitation rights has been determined.

The successful bidder for mineral exploitation rights is the sole entity or individual with the highest bid above the starting price after all bidding rounds, or the entity or individual who wins by drawing lots as stipulated in Point a, Clause 5 of this Article.

3. After each bidding round, the Chairman of the Auction Committee or the auction session manager publicly announces the highest bid of the round. If there are two or more identical highest bids, the Chairman of the Auction Committee or the auction session manager continues to distribute bid sheets to start the next bidding round.

The starting price for the next bidding round is the highest bid of the previous round. A bid in the bid sheet is valid if it equals the starting price plus an integer multiple of the bid increment.

4. All developments during the auction session on mineral exploitation rights must be recorded in a protocol. Upon conclusion of the auction session on mineral exploitation rights, the Chairman of the Auction Committee or the auction session manager publicly announces the conclusions of the committee and the successful bidder for mineral exploitation rights. The successful bidder for mineral exploitation rights must sign the auction protocol immediately at the auction session.

5. Special cases

a) In the event that there are two or more identical highest bids through three consecutive bidding rounds, the Chairman of the Auction Committee or the auction session manager will organize a public draw to select the successful bidder for mineral exploitation rights;

b) In the event that the successful bidder for mineral exploitation rights refuses to accept the winning result, the next highest bidder will be considered for supplementary approval by the Auction Committee;

c) In the event that the supplementary successful bidder refuses to accept the winning result, the Auction Committee issues a document nullifying the auction results and reports in writing to the competent authority for licensing to review and decide.

1. Within a period not exceeding 05 (working days) from the date of the end of the auction session for mineral exploitation rights, the agency receiving the auction dossier as stipulated in Article 17 of this Decree shall submit to the competent state authority issuing permits the dossier for approval of the results of the successful auction. The contents of the dossier include:

a) Minutes of the auction session;

b) Dossier of the organization or individual who won the auction requesting to participate in the auction;

c) Draft document approving the results of the successful auction.

2. Within a period not exceeding 05 (working days) from the date of receipt of the dossier for approval of the results of the successful auction, the competent authority issuing permits must issue a document approving the results of the successful auction. In case of non-approval, there must be a written notification specifying the reasons and any additional requirements (if any).

The content of the document approving the results of the successful auction must clearly record the full name, abbreviated name of the organization or individual who won the auction for mineral exploitation rights; type of minerals; location, coordinates, area of the auctioned mineral exploitation rights zone; rights and obligations of the organization or individual who won the auction and the winning bid price; commitments of the organization or individual who won the auction.

3. The document approving the results of the successful auction serves as a legal basis for the competent authority issuing permits to consider and issue permits for mineral exploitation activities to the organization or individual who won the auction in accordance with the laws on minerals.

1. The results of the successful auction for mineral exploitation rights must be publicly announced at the office of the agency receiving the auction dossier and on the website of the competent authority issuing permits immediately after the end of the auction session.

The content of the announcement of the results of the successful auction includes:

a) Name of the organization or individual who won the auction for mineral exploitation rights;

b) Type of minerals; location of the area where the auction for mineral exploitation rights was won;

c) Winning bid price.

2. The time for announcing and publicly posting the results of the successful auction is 05 (days) from the date of the end of the auction session.

3. The results of the successful auction for mineral exploitation rights within the jurisdiction of the Ministry of Natural Resources and Environment must also be posted on the website of the People's Committee of the province where the mineral area being auctioned is located.

Section 4

PRE-AUCTION BID FOR MINERAL EXPLOITATION RIGHTS

1. The value of the successful bid for mineral exploitation rights after the auction in areas that have already had mineral exploration results is determined as the pre-auction bid amount of the organization or individual calculated in Vietnamese Dong.

2. The value of the successful bid for mineral exploitation rights when auctioning in areas that have not been explored for minerals is a percentage of the mineral reserves in the area of the auctioned mineral exploitation rights.

The Ministry of Natural Resources and Environment shall take the lead, in coordination with the Ministry of Finance, to specify in detail the method of calculating the pre-auction bid amount for mineral exploitation rights in areas that have not been explored for minerals in Vietnamese Dong.

1. For cases of auctioning mineral exploitation rights in areas that have already had mineral exploration results, the time for determining the pre-auction bid amount is immediately after the end of the auction session.

2. For cases of auctioning mineral exploitation rights in areas that have not been explored for minerals, the time for determining the pre-auction bid amount is before issuing the Mining Permit.

3. The Ministry of Natural Resources and Environment shall take the lead, coordinating with the Ministry of Finance to specify in detail the methods of collection, management, and use of the pre-auction bid amount for mineral exploitation rights.

Chapter IV

IMPLEMENTING PROVISIONS

Article 26. Effective date

This Decree takes effect from May 15, 2012.

1. The Ministry of Natural Resources and Environment shall take the lead, coordinating with the Ministry of Finance and relevant ministries and sectors to be responsible for guiding the implementation of this Decree.

2. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairmen of provincial People's Committees directly under the Central Government, and related organizations are responsible for implementing this Decree./.