Gold miners dig in with fee protest

A higher proposed environmental protection charge for gold exploitation is aggravating gold miners in Vietnam.

The Ministry of Finance (MoF) has proposed the government release a new decree replacing the Decree 63/2008/ND-CP dated May 13, 2008 on environmental protection charges for mineral exploitation.

Accordingly, the charge for gold exploitation will be raised from VND10,000 ($0.48) to VND40,000 ($1.93) per tonne of gold ore, estimatedly accounting for 8-9 per cent of the current gold price.

“The current charge of VND10,000 per tonne is too low for gold exploitation,” said the MoF’s proposal.

According to the ministry’s proposal, the current environmental protection charge for gold mining makes up about 1.5 to 2 per cent of the price of finished gold, which is much lower than other minerals such as iron of 7.5 per cent and lead of 22.5 per cent.

“We fully support the government to collect the environmental protection charges and fees on mineral exploitation in Vietnam. However, it appears not to be efficient in preventing and remediating environmental damages as expected,” said Nguyen Xuan Tuong, vice-chairman of the management board of Phuoc Son Gold Company.

Phuoc Son Gold Company is one of two joint ventures of Canadian gold miner Olympus Pacific Minerals Incorporation, the only foreign gold mine at present in Vietnam which currently invests in two gold mining Bong Mieu and Phuoc Son projects in central Quang Nam province.

Tuong said together with royalties tax of 15 per cent, corporate income tax of 40 per cent, newly export tax of 10 per cent, the proposed charge would put more financial burden on enterprises.

Olympus’ chairman and CEO David Seton said the charge would not impact on environmental issues and doubted whether the tax would be used to improve the environment surrounding gold mining areas.

“Such taxes and fees will only be paid by legitimate mining operations that already need to comply with the laws on mining and environment, who pay royalties and taxes, and who should not be creating any environmental damage if they are complying with the law,” said Seton.

“A tax on people who are environmentally and fiscally responsible will only discourage responsible miners from growing and leaving more room for illegal miners who will simply cause more damage,” he added.

He said the major environmental damage in Vietnam was being created by illegal miners who did not pay taxes or royalties and who would not pay the new environmental tax whatever it was set at, therefore it appeared legal, environmentally responsible mining operators were being asked to fund the cleanup of the illegal operations which did not contribute to the tax receipts of the Vietnamese government.

“We believe that the environment would be more effectively protected if illegal miners were forced to operate within the law and comply with Vietnam’s very good health, safety and environmental laws, and be brought within the tax system and forced to pay tax,” said Seton. – VIR

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