Better State supervision, transparency would reduce mining industry losses

The Government should strengthen institutions and policies as well as improve the transparency of mining activities as an effective way of reducing industry losses.

Speaking at a conference on the Extractive Industries Transparency Initiative (EITI) and Viet Nam’s Ability to Participate in the Initiative held in Ha Noi on Thursday, deputy director of the Constancy on Development Institute (CODE) Pham Quang Tu said transparency in the industry could help the country benefit more from mining.

Deputy head of the Viet Nam Chamber of Comerce and Industry (VCCI)’s Legal Department Dau Anh Tuan said the mining industry would tackle illegal exploitation in a bid to preserve oil and coal supplies.

Lax State supervision meant that illegal exploration and mining was occurring in many provinces by companies with little experience or knowledge of the industry, complained Tuan.

Laiï Hong Thanh, deputy chief of the office of the Natural Resources and Environment Ministry said according to the law on minerals, revenue from the sector was subject to a mineral tax. However, companies had been declaring false figures to authorities regarding their mining yields, except for oil which was monitored and controlled.

Initiative to boost transparency

The EITI is an initiative based on a voluntary alliance between governments, companies, social and international organisations to enhance transparency in the mining sector.

The EITI is based on two main mechanisms. Mining companies must make comprehensive reports on expenditure for governments, while governments must publicise the revenue it receives from the companies. An independent agency then compares the data.

Over 30 countries were participating in the EITI as of May 2010. Over 50 of the worlds largest mining companies approve of the commitments outlined in the initiative. — VNS

VCCI’s deputy general secretary Tran Huu Huynh said transparency in the industry would be an important way of managing and using mineral resources effectively. In addition, it would attract more sustainable investment and force foreign enterprises to publicise their accounts, he said.

The State budget would benefit from more efficient mining activities and it would build people’s trust in the Government and confidence in investors.

Experts said that admission to the EITI could help Viet Nam limit losses and ineffective mineral exploitation.

“In particular, the country’s participation in the EITI would help boost national confidence in transparency and the fight against corruption,” Huynh said.

However, researchers also predicted that the implementation of the EITI in Viet Nam would be difficult, due to regulations regarding human resources and financial issues.

Le Van Khoa, director of CODE, said the country should focus on strategic minerals which contributed considerably to GDP including oil and coal.

Participants also said mining exploitation rights should be auctioned to ensure sustainable development.

EITI participation is considered an option for the sustainable development of the mining industry using environmentally friendly technology.

Reports from the institute showed that Viet Nam had a lot of mining potential, with large deposits of bauxite, titanium and rare earths, along with extensive oil and gas reserves.

The industry’s contribution to the country’s GDP increased from 4.81 per cent in 1995 to 11 per cent in 2008, while the petroleum sector contributed 24.37 per cent to the State budget in 2008 and the value of mining exports reached US$8.5 billion in 2009.

“Viet Nam needs to develop its mining industry because it is time for the country to take advantage of its rich mineral resources,” Tu said.

Viet Nam has already approved the Construction Sector Transparency Initiative and the Integrity and Transparency in Business Initiative for Viet Nam. — VNS

Tags: Vietnam mining industry