According to a report by the Vietnam Ministry of Natural Resource and Environment, the country possesses significant strategic mineral resources with substantial reserves, namely: an estimated 5.8 billion tons of bauxite, 600 million tons of titanium, around 20.7 million tons of rare earth reserves (consisting of approximately 2.7 million tons of assessed reserves and 18 million tons of unassessed reserves), and nearly 30 million tons of rare earth ores.
According to a 2022 report by the US Geological Survey, China has the largest rare earth reserves at 44 million tons, followed by Vietnam with 22 million tons, and Brazil with 21 million tons. Rare earths consist of 17 elements that are critical to the manufacturing of high-tech devices, batteries, and permanent magnets for electric vehicles, wind turbines, airplanes, phones, and the defense industry. In Vietnam, significant rare earth reserves have been detected in provinces such as Lao Cai, Yen Bai, and Lai Chau. Lai Chau is home to Vietnam’s largest rare earth mine, Dong Pao, covering 132 hectares, and also to the Bac Nam Xe and Nam Nam Xe mines.
Vietnam, having been endowed with the above-mentioned natural resources, can be described by the Vietnamese idiom as a land of “golden forest and silver sea” (in Vietnamese: rừng vàng biển bạc).
Vietnam’s Policy and Regulatory Framework
Significant policy and regulatory changes introduced by the following policies and law in 2022 – 2024 could quickly turn the tables in favour of Vietnam’s mining and rare earth industry:
- Resolution No. 10-NQ/TW dated 10 February 2022 of the Politburo on the strategic orientation of geology, minerals and mining industry until 2030, with a vision to 2045;
- Decision No. 866/QD-TTg dated 18 July 2023 of the Prime Minister approving the master plan for the exploration, exploitation, processing and use of minerals in the period 2021 – 2030, with a vision to 2050 (“Master Plan“);
- Decision No. 333/QD-TTg dated 23 April 2024 promulgating the plan to implement the Master Plan; and
- Law No. 54/2024/QH15 on Geology and Minerals adopted on 29 November 2024 by the Vietnamese National Assembly (“2024 Mineral Geology Law“).
According to the above policies and law, the existing Vietnamese geology and minerals regulations shall be reviewed, amended and supplemented to provide complete regulations on auctions of mineral exploitation rights, and exploration and exploitation of minerals as common construction materials in line with prevailing practice. This also aims to enhance the management of exploitation of minerals in accordance with market principles.
The 2024 Mineral Geology Law
On 29 November 2024, the National Assembly adopted the new 2024 Mineral Geology Law with 446 out of 448 votes. The new 2024 Mineral Geology Law was announced on 20 December 2024 via an Order of the President. It will take effect from 1 July 2025 except for some provisions as stipulated in Articles 110.2 and 110.3, which will take effect earlier, from 15 January 2025.
Currently, a draft Decree detailing the implementation of a number of articles of the 2024 Mineral Geology Law in respect of the exploitation of Group IV minerals (described below) has been published for public comment, while a draft Decree guiding the implementation of a number of other articles of the 2024 Mineral Geology Law is in the process of being completed. The draft Decree details regulations on basic geological and mineral surveys, mineral area, mineral activities, mineral recovery, mineral processing, closure of mineral mines for Group I or Group III, management of sand and gravel in river beds, lake beds and marine areas, information and data on geology and minerals, finance on geology, minerals, and auction of mineral exploitation rights.
In comparison with the Mineral Law No. 60/2010/QH12, as amended by Law No. 35/2018/QH14 (referred to as the “2010 Mineral Law“), the new 2024 Mineral Geology Law introduces significant changes. They are highlighted below.
- State responsibility in geological survey and the use of State budget
Under the 2024 Mineral Geology Law, the State shall be responsible for the following:
- basic geological survey, investigation, delineation, and mapping geological sites, geological heritage, and position of resources;
- investigation of environmental geology and geological hazards;
- investigation of engineering geology and urban geology, and investigation of other geological conditions including investigating, mapping geological space, and mapping underground space;
- geothermal resources;
- renewable geological resources; and
- rights and obligations of organisations and individuals engaged in basic geological investigation activities.
The State budget shall be used to (i) explore (a) strategic and important minerals and (b) great economic value and demand minerals; and (b) implement mine closure projects in some special cases such as when a project owner goes bankrupt or becomes financially incompetent.
- Classification of minerals and clarification on Group IV mineral exploitation
The 2024 Mineral Geology Law categorises minerals into four groups based on usability and management goals as follows:
- Group I minerals include metallic minerals, energy minerals, precious and semi-precious stones, and industrial minerals.
- Group II minerals include minerals used as materials in the construction industry in the production of cement, tiles, sanitary ceramics, construction glass, paving stones, fine art stones, industrial lime, and refractory materials.
- Group III minerals include minerals used as common construction materials but exclude construction materials that fall under Group II and Group IV, peats, mineral muds, natural mineral water, and natural hot water.
- Group IV minerals include minerals only suitable for purposes of making filling materials, building foundations, constructing irrigation works, and preventing and fighting natural disasters, including clay, hill soil, soil (not otherwise categorised), soil mixed with rocks, sand, pebbles or gravel; and sand (except sand and gravel in riverbeds, lake beds and marine areas).
The above classification serves to establish an appropriate approach from planning to licensing mineral exploration and exploitation, allowing mineral recovery, controlling mineral activities, and closing mines. It also facilitates proper and appropriate decentralisation of powers to local governments, and reform of administrative procedures for each mineral group.
- Decentralisation of power including resource allocation
The 2024 Mineral Geology Law decentralises the decision-making power of the national government to local governments including resource allocation. This allows lower-level agencies to improve their enforcement capacity in the implementation of the law with respect to inspection, supervision and control especially at the grassroots level.
In this regard, the 2024 Mineral Geology Law authorises the provincial People’s Committee to:
- approve certain mineral exploration projects and report the results of basic geological investigations conducted in accordance with the planning and geological investigation of minerals for Group III and Group IV minerals, and carry out such geological investigations within the allocated local budget capital;
- decide whether to allow the recovery of Group I and Group II minerals when embarking on investment projects in national mineral reserves; and
- issue exploration licences and licences to exploit natural mineral water and natural hot water.
- Mineral exploitation without mineral planning
The 2024 Mineral Geology Law has added special cases where mineral exploitation without mineral planning is allowed. These special cases include dispersed and small-scale mineral exploitation, mineral recovery, and salvage mining of minerals. The grant of mineral exploitation licences in such cases is not based on the management plan for geology and minerals, which is a component of the integrated provincial plan for environmental protection, exploitation, use and protection of natural resources, biodiversity, natural disaster prevention and response, and climate change.
- Circular economy model and technology
The 2024 Mineral Geology Law prioritises the use of environment friendly technology, equipment and materials, and adopts the circular economy model in mineral exploitation and processing activities.
- Recognition of mineral exploration results instead of approval
Previously, the 2010 Mineral Law stipulated that any statement of mineral reserves in the mineral exploration result reports shall be subject to the approval of the relevant competent authority. However, under the 2024 Mineral Geology Law, a recognition of mineral exploration results is sufficient. This means no approval of any statement of mineral reserves is required.
- Clarification on mineral recovery
The 2024 Mineral Geology Law clarifies what constitutes mineral recovery activities, which are combined activities aimed at obtaining minerals during the implementation of investment projects or other activities according to plans approved/accepted by competent authorities.
Mineral recovery is carried out in accordance with a mechanism that is different from that used in mineral exploitation. Unlike mineral exploitation, mineral recovery is not defined under the 2024 Mineral Geology Law as a mineral activity; rather, it is considered a mineral-related activity. A mineral exploitation project must go through a full process of mineral investment to be carried out by investors with mineral experience. In contrast, mineral recovery is an incidental activity arising from the implementation of an investment project. Examples of mineral recovery activities include building roads, constructing power plants, agriculture, etc. Thus, it is not necessary for a mineral recovery activity to be carried out by an investor with mineral experience. Accordingly, the licensing for mineral recovery is being treated as the same as mineral exploitation without mineral planning. However, it is very unlikely that an inexperienced investor will be granted a mineral recovery licence for minerals under Group I, given that the submission of an evaluation of economic efficiency (namely, another form of feasibility study) of the activity is required for the grant of a licence for mineral recovery for this group.
- Calculation of applicable fees
Under the 2024 Mineral Geology Law, fees for granting mineral exploitation rights are based on mineral reserves allowed to be mined or the volume of minerals allowed to be recovered. Fees for granting mineral exploitation rights are collected annually and settled according to actual mining output.
- Exploration and exploitation of sand and gravel in riverbeds
The 2024 Mineral Geology Law clearly stipulates that the exploration and exploitation of sand and gravel in river beds, lake beds and marine areas must be carried out in compliance with regulations for Group II or Group III minerals. This requires supervision of such exploration and exploitation using modern technology and equipment to manage fluctuations in mineral reserves, minimise safety risks and serious impact on the environment, and minmimise risk of landslides, instability of river beds, river banks and coastlines.
Vietnam’s Bilateral and International Commitments
Currently, Vietnam does not have a central database of bilateral agreements regarding mineral exploration and mineral recovery. However, according to reports , it is very likely that to date, Vietnam has concluded bilateral agreements on mineral explorations with the Netherlands, Australia, Laos, and the US. The 2024 Mineral Geology Law stipulates that if there is strategic or important mineral exploration as agreed upon in a bilateral agreement to which Vietnam is a party, the area of mineral exploration shall be in accordance with the agreement.
Regarding market access under international treaties, Vietnam commits to open up investment in mining to foreigners under both the Comprehensive and Progressive Trans-Pacific Partnership (“CPTPP“) and the EU-Vietnam Free Trade Agreement (“EVFTA“). Under the CPTPP, several conditions for foreign investment in the mining sector in Vietnam are imposed, and an approval for foreign investment will only be granted if the investment project is shown to bring net benefits to Vietnam. Under the EVFTA, the establishment of joint ventures with a maximum 51% of foreign capital contribution or 100% foreign-owned enterprises might be allowed in the mining sector. It is also worth noting that both the CPTPP and the EVFTA aim to cut down taxation in relation to mining. For the CPTPP, it targets imposing custom duties on all mining-related goods imported from member states. The EVFTA, on the other hand, aims to reduce almost all tariffs by up to 99%, which could attract foreign investment flows to mining equipment services and technologies and oilfield service providers. Furthermore, the EVFTA adopts the core labor standards recommened by the International Labor Organization, which, among others, ensure better working conditions for workers, a key aspect for laborers working on mining projects.
Concluding Words
Since Vietnam aims to become an attractive destination for semiconductor and chip manufacturing, there is a need for deep processing and refining of essential minerals like rare earths to enable the country to develop strategic industries and boost exports. Per the Master Plan, Vietnam aims to exploit and process more than two million tons of rare earth ores by 2030 and produce up to 60,000 tons of rare earth oxides equivalent per year. Vietnam also plans to auction mining rights for several areas of Dong Pao. This plan to auction mining rights in the country’s largest rare earth mine, which is also among the world’s biggest mines, is expected to draw significant foreign interest.
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