Using auctions to disrupt the market
More than 2 months since the unusual auction at the DB2B sand mine (Dien Ban, Quang Nam), with an auction price of 370 billion VND, although the starting price was only 1.2 billion VND, Quang Nam province has yet to recognize the auction results.
Previously, in the DB2B sand mine auction on October 18, which lasted 20 hours and 200 rounds, MT Quang Da Joint Stock Company (Khue Trung Ward, Cam Le District, Da Nang City) surpassed 27 investors to become the unit offering the highest bid, up to 370 billion VND, an increase of more than 308% compared to the starting price.
Immediately after the auction ended, the People's Committee of Quang Nam province directed the police and natural resources and environment departments to investigate and strictly handle violations. Because the DB2B mine has an area of 6.04 hectares, the approved planned reserve is 159,000m3. It is estimated that the winning bidder must sell sand on the market for more than 2.3 million VND/m3 to make a profit, not to mention the costs of resource tax, environmental protection fees, exploitation costs... While the price approved by the province is only 150,000 VND/m3, the market price is about 250,000 VND/m3.
According to the Quang Nam government, the supply of fill materials, sand, and construction stones in the area is in short supply; the actual purchase price is higher than the material price announced by the authorities; some mining enterprises are operating at a moderate level (especially construction sand), hoarding goods to manipulate prices. In particular, in the auction of mineral exploitation rights, there are signs that some organizations and individuals collude and take advantage of participating in the auction to manipulate and disrupt the market for personal gain.
Chairman of the People's Committee of Quang Nam province Le Van Dung has requested the provincial police to continue investigating and clarifying violations in the auction of mineral exploitation rights at the DB2B mine. If organizations and individuals commit violations that constitute a crime, they will coordinate with the Provincial People's Procuracy to prosecute and handle them to deter and educate; resolutely prevent and restore order and discipline in mineral exploitation rights auction activities in the province in the coming time. For enterprises that have been granted mineral exploitation rights, if they re-offend, it is proposed to suspend their operations...
The failed auction of 1.3 million cubic meters of sand has not been resolved yet.
The Office of the People's Committee of Quang Nam province said that it has just sent a report at the request of Secretary of the Quang Nam Provincial Party Committee Luong Nguyen Minh Triet, regarding the article "Quang Nam does not lower the price of 1.3 million cubic meters of sand after 2 unsuccessful bids" that Lao Dong reported.
As reported by Lao Dong, about 1.3 million cubic meters of sand dredged from Co Co River (Hoi An) was auctioned by Quang Nam twice in October and November 2022, with a starting price of VND 144,000/m3, expecting to collect nearly VND 220 billion, but no individuals or organizations registered to participate in the auction.
Quang Nam authorities determined that the reason for the failed auction was partly due to the large volume of one-time auctions. After winning the auction, customers had to immediately pay a large sum of money (nearly 200 billion VND), so they limited customers from registering to participate in the auction due to lack of financial capacity.
According to the environmental assessment records as well as the material testing results of Asia Consulting and Testing Company Limited, this sand is contaminated with salt and cannot be used for construction (construction sand, plastering sand), it can only be used as a material for filling urban areas, and filling foundations for some items of construction works.
The proposal to adjust the starting price down from 144 thousand VND/m3 to 119 thousand VND/m3, to continue organizing the auction according to regulations, but was not approved, due to lack of basis and inappropriateness.
Quang Nam province said that to resolve this problem, Quang Nam province agreed to divide 1.3 million cubic meters of sand into many lots, many batches to continue the third auction, ensuring feasibility.
Regarding the determination of the starting price, according to Vice Chairman of Quang Nam Provincial People's Committee Tran Nam Hung, the report of the Traffic Department and the consulting unit, it is impossible to re-determine the starting price at the present time, because there is no information on the market to apply the valuation method from the market approach to calculate and determine the price of the asset.
Therefore, in order to have a basis for consideration and continue to apply the starting price of 144,000 VND/m3, as applied in the previous two auctions, the province has directed the responsible units to complete the documents, ensure strict compliance with regulations, and soon put the sand up for auction.
