Unreasonably high bids
On October 22, answering Lao Dong newspaper, Mr. Tran Phuong - Deputy Director of the Vietnam Minerals Department, under the Ministry of Natural Resources and Environment said that recently, in some localities, the results of winning mineral exploitation rights auctions have been exceptionally high (especially sand).
There are mines that only calculate the auction winning value/1 product unit (not including investment costs for exploitation, transportation, consumption and other tax and fee obligations) which is many times higher than the selling price of the same product on the market.
In the auction that ended at dawn on October 19, MT Quang Da Joint Stock Company (headquartered in Khue Trung ward, Cam Le district, Da Nang city) auctioned the DB2B sand mine in Dien Tho commune, Dien Ban town, Quang Nam for up to 370 billion VND, an increase of more than 308% compared to the starting price (1.2 billion VND).
The DB2B sand mine has an area of 6.04 hectares, reserves of 159,000m3, and a deposit of more than 242 million VND.
With the auction price of 370 billion VND, it is estimated that the enterprise must sell sand on the market for more than 2.3 million VND/m3 to make a profit, not to mention other costs... While the ceiling price set by Quang Nam is only 150,000 VND/m3 of sand.
Previously, in early October 2024, the Hanoi Department of Natural Resources and Environment also canceled the auction results of the exploitation rights of three sand mines: Lien Mac (Bac Tu Liem district), Tay Dang - Minh Chau (Ba Vi district) and Chau Son (Ba Vi district).
These 3 mines also have auction prices of up to about 1,700 billion VND, dramatically higher than the starting price.
The reason for canceling the auction results of the three sand mines above is because the contractor violated the provisions of the Law on Bidding.
Proposal to ban auctions for 5 years if deposit is forfeited
According to a representative of a construction company that successfully participated in auctions for many sand mines in Quang Nam, there are two possibilities for investors offering high prices for sand mines.
“If they have a real need, owning more sand mines will be convenient in regulating the supply to the market, as well as the price. The second case is companies that specialize in auctioning mineral mines, even though they have no need to exploit them. Before the auction, they negotiate with the unit that has the need, raising the issue of “bribery” to give up the right to win the auction. If they cannot reach an agreement, they will fight to the end to “break the party”, accepting to lose the deposit,” this person said.
Lawyer Nguyen Thanh Tan, from the Quang Nam Bar Association, said that according to current regulations, if a business cancels its deposit, it will only lose the amount it has deposited. In addition, there are still no other sanctions. This could be a “loophole” that allows units to take advantage of raising the auction price and then accepting to cancel the deposit.
Mr. Tran Phuong - Deputy Director of Vietnam Minerals Department said that to overcome this situation, it is necessary to have synchronous solutions.
“There should be sanctions to increase the responsibility of investors when participating in the auction of mineral exploitation rights, such as increasing the deposit level before participating in the auction (maximum 20% of the starting price).
There is a sanction of banning participation in similar auctions for a certain period of time. Currently, the draft Law on Geology and Minerals being submitted by the Government to the National Assembly for consideration and approval has stipulated a ban on participation in auctions of mineral exploitation rights for a period of 5 years if the deposit is waived,” said Mr. Phuong.
