Joint Circular No. 96/TT-LB stipulates the capital recovery regime for mineral resource exploration before mine exploitation.

CIRCULAR

OF THE MINISTRY OF FINANCE AND HEAVY INDUSTRY

REGULATING THE CAPITAL RECOVERY SYSTEM FOR MINERAL RESOURCES EXPLORATION
WHEN MINES ARE PUT INTO OPERATION

BASED ON Article 21 of the Mineral Resources Ordinance dated July 25, 1989;

IMPLEMENTING Clause 7 of Decree No. 195/HĐBT dated March 25, 1992 of the Council of Ministers (now the Government) on the implementation of the Mineral Resources Ordinance;

The Ministry of Finance and Heavy Industry hereby regulates the capital recovery system for mineral resources exploration when mines are put into operation as follows:

I. GENERAL PROVISIONS

Article 1: The capital recovery system for mineral resources exploration aims to reimburse a portion of the state budget that has been invested through public funds for the work of exploring mineral resources (hereinafter referred to as mine evaluation work) when the mine is transferred to exploitation.

Article 2: All entities using mine evaluation materials for mining purposes (or further exploration for exploitation) must pay the capital recovery amount for mineral resources exploration according to this Circular when the mine goes into operation.

Article 3: Mine evaluation materials for all solid, liquid, and gas minerals (including oil and gas) include all collected and compiled documents during the research, survey, exploration process, presented in comprehensive reports on exploration work and accompanying documents approved by the competent authority (the State Mineral Reserve Review Board, the Vietnam Geological Survey, the Ministry of Heavy Industry).

Mine evaluation materials funded by the state budget's public funds are national documents. Their use for different purposes must be permitted by the competent authority.

Article 4: Cases where mine evaluation materials are used for scientific research, training, planning, development strategies, etc., as assigned by the state plan or permitted by the state, are exempt from payment of capital recovery.

II. OBJECTS OF COLLECTION, AMOUNT OF COLLECTION, METHODS OF COLLECTION AND
PAYERS OF CAPITAL RECOVERY

Article 5: The objects of collection are mine evaluation materials for mineral resources used by investors for mining purposes (or further exploration for exploitation) as stipulated in Article 3 of Part I of this Circular.

Article 6: The amount of collection is the total investment value into the mine evaluation work for mineral resources based on current market prices at the time of mine exploitation.

The basis for determining the amount of collection is as follows:

- The value of investment in mineral resources exploration.

- The economic efficiency of the mineral resources.

- World and regional prices for mineral resources.

- Levels of encouragement for investment attraction.

For mines involved in foreign joint ventures, in addition to the value of investment in mineral resource evaluation, the geological project costs of countries in the region will also be considered, along with reasonable additional amounts provided by the Vietnamese state.

Article 7: The method of determining the amount of collection is calculated according to the formula:

- In which, the volume of geological works invested in mine evaluation is based on comprehensive reports on mine evaluation work from research, survey, exploration, and geological investigation stages, reviewed and approved by the competent authority.

- The current geological project cost and other ratios and costs are taken from the unified issuance by the Ministry of Finance, the Ministry of Heavy Industry, and relevant ministries collaborating in mineral resource exploration.

- If a mine is granted permission to use only part of the geological data, the amount payable = investment value in exploration and survey x ratio of granted reserves.

Article 8: For state-owned enterprises investing in mines, the entire capital recovery amount for mineral resources exploration is recorded and disbursed by the Ministry of Finance, and a notice is issued to allocate the funds for enterprise use. Enterprises record it as intangible fixed assets and state budget fixed capital, while ensuring capital preservation, paying usage fees, and deducting depreciation expenses according to regulations. Annual depreciation rates are determined based on the mine's operational life or production volume.

Article 9: For state-owned enterprises partially funded by foreign capital or engaging in business cooperation with foreign entities under Vietnam's foreign investment law (excluding wholly foreign-owned enterprises), the entire capital recovery amount for mineral resources exploration is converted into state capital contribution or loans for the Vietnamese side to invest in joint ventures (if needed). The Vietnamese joint venture partner must accept capital contributions or sign loan agreements with the Ministry of Finance according to Circular No. 19TC/TCĐN dated June 9, 1992, of the Ministry of Finance on guiding the fulfillment of debt obligations and repayment of state budget capital by Vietnamese parties in joint ventures and business cooperation with foreign entities.

After the joint venture confirms the inclusion of the capital recovery payment in the capital contribution and the Ministry of Finance issues a notice of capital contribution or loan to the Vietnamese joint venture partner, the mining permit can be issued.

Other economic components outside state-owned enterprises contributing capital or entering into business cooperation contracts with foreign entities under Vietnam's foreign investment law shall comply with the provisions of Article 10.

Article 10 : For wholly foreign-owned enterprises, state-owned enterprises with foreign investment capital or joint venture contracts that do not need to use the amount of money required for geological exploration repayment to contribute capital (established under the Law on Foreign Investment in Vietnam) and private enterprises, joint-stock companies (established under the Law on Private Enterprises and the Company Law), they must compulsorily pay initially 10% of the total revenue to obtain permission to use mine evaluation documents and mining permits. The remaining revenue will be paid annually based on production volume according to the following formula:

Estimated total production volume

Based on the annual business plan, the enterprise temporarily pays quarterly and adjusts the payment amount at the end of the year according to actual production volume.

If the enterprise pays the entire total revenue in one lump sum, it will be granted a 10% reduction in the amount payable.

III. PROCEDURES FOR PAYMENT AND COLLECTION

Article 11: Enterprises wishing to use mine evaluation documents shall register with the Ministry of Heavy Industry to request permission to use such documents.

The Ministry of Heavy Industry reviews and issues a notice allowing the unit to proceed with the procedures, while working with the Ministry of Finance to issue a notice on the collection rate according to the following cases:

- For state-owned enterprises, the notice sets out the collection rate to allocate capital to the enterprise.

- For enterprises with partial foreign investment capital, the notice sets out the collection rate to be included in the contribution of the Vietnamese side to the joint venture.

- For wholly foreign-owned enterprises, private enterprises, and joint-stock companies, the notice sets out the collection rate for the enterprise to proceed with the procedures for paying the state budget.

Article 12: After receiving the notice, enterprises go to the local tax authority (for enterprises subject to payment in cash) and to the Ministry of Finance (for state-owned enterprises, enterprises with partial foreign investment capital, or joint ventures with foreign countries) to complete the payment and collection procedures as prescribed above.

Article 13: Based on the receipt of payment, or records of income and expenditure confirming the allocation of capital or loan contributions from the Ministry of Finance and the local tax authority, the Ministry of Heavy Industry proceeds to issue mining permits to enterprises.

Article 14: The revenue from the repayment of exploration and search funds for mineral resources belongs to the central budget and is collected into the State Treasury.

Article 15: Annually, the competent ministries, the Ministry of Finance must prepare plans and settle the collection of repayment funds for exploration and search of mineral resources, including the portion paid directly in cash, the portion recorded as income and expenditure for capital allocation, and the contribution to joint ventures of enterprises.

Article 16: Reduction in the collection rate for exploration and search funds for mineral resources.

Exemption or reduction in the collection rate for exploration and search funds for mineral resources in cases where the quality of mine evaluation documents has significant discrepancies causing the reserve to decrease by 30-50% compared to the reserve stated in the documents.

Exemption for the quantity of resources mined before this Circular takes effect.

Specific cases for exemption or reduction are as follows:

a. Automatically reduce by 10% for cases where the full amount is paid in one lump sum when issuing the mining permit.

b. If there are significant discrepancies in the quality of mine evaluation documents, the reduction rate is calculated based on the ratio between the actual reserve and the reserve stated in the documents. However, the maximum reduction rate does not exceed 50% of the total repayment fund.

c. In cases where the mine evaluation documents are completely incorrect and there is actually no mine, the payment is fully exempted. For this exemption, the Ministry of Finance will refund the corresponding amounts paid from the sources mentioned above (excluding the 10% initial compulsory payment).

d. Exemption for the quantity of resources mined from the establishment date until the effective date of this Circular. The exemption rate corresponds to the ratio of the mined reserve to the total reserve.

Article 17: The assessment of the actual reserve reduction of the mine compared to the reserve stated in the documents must be confirmed by the State Mineral Reserve Review Council (Ministry of Science and Technology and Environment) and the Ministry of Heavy Industry (Vietnam Geological Survey).

Article 18: Enterprises requesting exemptions or reductions shall prepare and submit applications to the Ministry of Heavy Industry for review and resolution.

The application for exemption or reduction includes:

- A request for exemption or reduction of the collection rate for exploration and search funds for mineral resources.

- An explanation of the discrepancies in the mine evaluation documents compared to reality and the confirmation opinions of the State Mineral Reserve Review Council.

After receiving the application for exemption or reduction, the Ministry of Heavy Industry reviews and works with the Ministry of Finance to notify the enterprise and relevant agencies within 60 days from the date of receipt of the enterprise's application.

IV. IMPLEMENTATION PROVISIONS

Article 19: This Circular takes effect from the date of signature. All mines currently being exploited, including those that have transferred mine evaluation documents and those that have not yet transferred documents, must uniformly implement this Circular.

Enterprises that are investors in mining operations and related ministries and localities involved in exploration or exploitation of mineral resources must immediately carry out the procedures stipulated in this Circular.

Failure to comply with or evasion of the obligation to pay the exploration and search funds for mineral resources will be handled according to the law depending on the severity of the violation and may result in the denial of a mining permit.

Article 20: During implementation, if there are difficulties, enterprises and relevant agencies should report to the Ministry of Finance and the Ministry of Heavy Industry for consideration and resolution.