Decision No. 124/2006/QD-TTg dated May 30, 2006 of the Prime Minister approving the planning on exploration, exploitation, processing and use of iron ores up to 2010, with orientations toward 2020

DECISION

APPROVING THE PLANNING ON EXPLORATION, EXPLOITATION, PROCESSING AND USE OF IRON ORES UP TO 2010, WITH ORIENTATIONS TOWARD 2020

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

At the proposal of the Industry Ministry in Documents No. 4469/TTr-KH of August 19, 2005, and No. 387/BCN-KH of January 18, 2006; and after considering opinions of concerned ministries and agencies,

DECIDES:

Article 1.- To approve the planning on exploration, exploitation, processing and use of iron ores up to 2010, with orientations toward 2020, with the following principal contents:

1. Viewpoints:

a/ Vietnam's iron ores should be explored, exploited, processed and used rationally, economically and efficiently, while the eco-environment should be protected and social security and order be ensured in localities having iron ores.

b/ The planning on exploration and exploitation of iron ores shall serve as a basis for restoring order in mineral activities according to the provisions of law, guaranteeing the interests of the State, enterprises and people in localities having iron ores.

c/ Building and developing the iron ore exploitation and processing industry with modern technologies, suitable to Vietnam's conditions; increasing the mineral recovery co-efficient.

d/ Encouraging various economic sectors to invest in exploration, exploitation and processing of iron ores on the basis of observing the provisions of law on mineral activities, ensuring labor safety and protecting natural resources.

2. Objectives

a/ To meet domestic metallurgical establishments' demand for iron ore materials, set aside part of iron ore materials for export in exchange for coke and fat coal for metallurgical purposes.

b/ To carry out geological surveys primarily in potential magnetite-ore places and in combination with other geological tasks.

c/ To prepare adequate documents on reserves, quality and exploitation conditions of mines which shall be put to exploitation before 2020.

d/ To identify exploration and exploitation areas, including areas where mineral activities are banned or restricted, ensuring that mineral activities are carried out in accordance with the provisions of law.

3. The Planning's contents

a/ Demand for iron ores: To meet the iron ore demands of pig-iron refinery establishments and cement industry; to export part of iron ores exploited from mines outside material areas already planned for metallurgical establishments in exchange for coke and fat coal (planned to be 1.5 million tons in 2006; 9 million tons by 2010; 15 million tons by 2015; and 16 million tons by 2020).

b/ Planning on exploration: From now to 2020, to explore as planned 14 mines and mine areas, of which 2 mines shall be additionally explored and 3 mines shall be transferred to localities for management. The exploration results should ensure sufficient reserves for stable exploitation in mine areas in Cao Bang, Tuyen Quang and Ha Giang; to prepare resources for planning the exploitation and processing in new mine areas in Tran Yen (Yen Bai), Tong Ba (Ha Giang), Thanh Son (Phu Tho), and Mo Duc (Quang Ngai) after 2015. See details in Appendix I enclosed herewith.

c/ Planning on exploitation and processing:

- Planning on exploitation:

+ From now to 2020, to exploit 26 mines in 9 provinces to fully meet the consumer households' demand for iron ores, including 6 mines in Lao Cai, 4 mines in Yen Bai, 2 mines in Ha Giang, 2 mines in Tuyen Quang, 3 mines in Cao Bang, 4 mines in Bac Kan, 2 mines in Thai Nguyen, 2 mines in Thanh Hoa, and 1 mine in Ha Tinh. The exploitation output shall be 9 million tons/year by 2010; 14-15 million tons/year in the 2011-2015 period; and 15-16 million tons/year in the 2016-2020 period. See details in Appendices II and III.

+ The above-said output may be adjusted, depending on the actual development of Vietnam's metallurgical industry and specific requirements of foreign investment projects on metallurgy in Vietnam.

- Planning on processing: Since the most of iron ores in mines are of low quality, they should be processed and enriched before consumption. To make coordinated investment in the mineral exploitation and sorting to enrich ores, meeting the requirements of the metallurgical stage.

- The iron ore exploitation and processing output in each locality shall be as follows:

+ In the period from now to 2010:

(1) In Lao Cai province: To exploit and process iron ores in Quy Xa mine and other mines with a total output of 3.5-4.5 million tons/year for supply to a pig-iron manufacturing factory in Lao Cai with a capacity of 500,000 tons/year, to Thai Nguyen Pig Iron and Steel Company, and for export in exchange for fat coal, coke and other materials.

(2) In Cao Bang: To exploit and process iron ores with a total output of 350,000-450,000 tons/year in mines within the province for supply to two kilns to be built in Cao Bang with a capacity of 30,000 tons of pig iron/year, and to Thai Nguyen Pig Iron and Steel Company.

(3) In Bac Kan: To exploit and process iron ores with a total output of 200,000-350,000 tons/year in mines within the province for supply to two kilns (25 m3) being built in Bac Kan, and to Thai Nguyen Pig Iron and Steel Company.

(4) In Thai Nguyen: To exploit and process iron ores with a total output of 400,000-500,000 tons/year in Trai Cau mine, Tien Bo mine and other mines within the province for supply to Thai Nguyen Pig Iron and Steel Company's project on production expansion, phases II and III, with a total capacity of 750,000 tons of liquid pig iron/year.

(5) In Ha Tinh: To prepare for exploitation of Thach Khe iron mine with an initial capacity of 5 million tons/year.

+ In the post-2010 period

(6) In Ha Tinh: To exploit and process iron ores with a total output of 5-8 million tons/year in Thach Khe mine for supply to Ha Tinh Steel Complex with a capacity of 2.5-4.5 million tons/year.

For other provinces where exist iron ores (such as Tuyen Quang, Yen Bai, Ha Giang and Thanh Hoa), steel refinery zones may be built only when there are exploration documents ascertaining the existence of iron resources and other resources, and the approval of competent authorities is obtained.

4. Investment capital

a/ Investment capital for exploration (around VND 60 billion) shall primarily come from the source of investors' capital.

b/ Investment capital for iron ore exploitation and sorting (around VND 6,900 billion) shall be mobilized by investors from their own capital, loans and, in other lawful forms.

c/ In special cases, the Prime Minister shall consider and decide on specific forms of support.

5. Solutions to and policies for implementation

a/ Solutions

- To manage and discover iron ore potential: To soon build and apply a national computerized system for management of geological data on iron ores for national archive; to continue studying and formulating investigation programs in order to discover more potential iron-ore mines and spots in northern mountainous and Middle-Central Vietnam provinces; to demarcate areas of mines and structures in service of exploitation of mines and mine spots in the planning to ensure the rational use of land, minimizing compensation and ground clearance expenses in the future. To step up the work of detailed exploration in order to prepare natural resources for projects which shall be put to exploitation during the 2006-2020 period.

- Exploitation and use of iron ores:

+ Priority shall be given to mine exploitation projects to serve the domestic manufacture of steel cast.

+ To apply advanced techniques and technologies to the exploitation and processing of iron ores; to raise labor productivity and closely control cost in order to turn out competitive products.

+ To concentrate efforts on studying and selecting appropriate metallurgical technologies for the most efficient use of iron ore and other materials in the country.

+ To step up international cooperation in the domain of ore exploitation and processing science and technology.

- Infrastructure-related solutions: Priority shall be given to investment in the construction of roads, railways and ports in provinces where ores are being and to be exploited in service of national economic development.

b/ Policies

- To work out policies on the use, import and export of iron ores under the guideline of economical and rational use of natural resources, raising the economic efficiency of the exploitation and processing of iron ores, gradually making the export of iron ores officially quota-regulated on the basis of medium- and long-term contracts, ensuring harmony in local socio-economic development and raising the economic value of iron-ore minerals.

- To work out preferential financial, tax and land mechanisms and policies for investment projects on exploitation of iron ores for use as materials for domestic manufacture of steel cast. To encourage all economic sectors to invest in the exploration, exploitation and processing of iron ores under the planning to meet the domestic production demand. To create state budget and credit capital sources for supporting the exploration and investing in the exploitation of several iron-ore mines.

- To adopt policies to attract geological, mineral-sorting and exploitation managers and scientists for domestic iron-ore exploration and exploitation and metallurgical projects.

- Regarding international cooperation:

+ For projects on Quy Xa and Thach Khe mines, in order to encourage foreign investors and, at the same time, ensure coordinated mine exploitation and metallurgy, it is possible to cooperate with foreign partners in the form of joint venture in making investment in the mines, with the Vietnamese parties holding dominant shares.

+ Domestic enterprises are encouraged to conduct small-scale exploitation or full extraction of certain mines.

Article 2.- Organization of implementation

1. The Ministry of Industry shall assume the prime responsibility for, and coordinate with concerned ministries and branches and localities in, organizing the implementation of the planning on zoning off areas for exploration, exploitation, processing and use of iron ores up to 2010, with orientations toward 2020. To propose mechanisms and policies for stable and sustainable development of the iron-ore exploitation and processing industry.

2. The Ministry of Natural Resources and Environment shall formulate and submit to the Prime Minister for approval a planning on basic geological survey on iron-ore mineral resources, in compliance with this planning, and direct the implementation thereof.

3. The Ministry of Planning and investment and the Ministry of Finance shall balance budget capital for construction of technical infrastructure outside the fences of mine-metallurgical complexes in Quy Xa and Thach Khe.

4. Provincial/municipal People's Committees shall manage and protect iron-ore resources in their respective localities when the mines are not yet assigned to organizations or individuals for management and exploitation according to regulations; to prevent illegal exploitation and export of iron ores. To formulate and submit to People's Councils of the same level for approval plannings on exploration, exploitation, processing and use of iron ores in mines which fall under their licensing competence.

Article 3.- This Decision takes effect 15 days after its publication in "CONG BAO."

Article 4.- Ministers, heads of ministerial-level agencies, heads of Government-attached agencies, and presidents of provincial/municipal People's Committees shall have to implement this Decision.

APPENDIX I

LIST OF ORE MINES AND PLACES SUBJECT TO EXPLORATION
(Issued together with the Prime Minister's Decision No. 124/2006/QD-TTg of May 30, 2006)

APPENDIX II

LIST OF CENTRALLY MANAGED IRON-ORE MINES AND PROJECTED PROGRESS OF EXPLOITATION UP TO 2020
(Issued together with the Prime Ministers Decision No. 124/2006/QD-TTg of May 30, 2006)

APPENDIX III

LIST OF MINES TO BE EXPLOITED IN THE PERIOD FROM NOW TO 2010
(Issued together with the Prime Minister's Decision No. 124/2006/QD-TTg of May 30, 2006)