Mine and quarry operators may be faced by a big rise in environmental protection fees following the government’s decision to revise the charges.
Pham Ngoc Thach, head of Tax and Fee Section under the Ministry of Finance’s (MoF) Tax Policy Department, said the ministry was revising the government’s Decree 74/2011/ND-CP on environmental protection fees (EPF) for mineral exploitation with the view that they needed to dramatically increase to take into account the heavy pollution caused by mining and quarrying and the currently insufficiently low charges.
The revised decree will be submitted to the government in November after receiving feedback from localities and enterprises.
Thach said the current proposal would see the EPF double or triple from existing levels for soil, rock, sand and gravel exploitation. The current maximum EPF for iron, lead, zinc, copper, quartzite, apatit and graphite would in the future form the bottom line for EPF fees. For coal, the EPF would be tripled from a current VND10,000 (47 cents) to VND30,000 ($1.43) per tonne.
EPF fees collected are intended to be used for environmental protection measures in the affected localities.
However, Tran Ngoc Anh, representative of Canada’s Ban Phuc Nickel Mines LLC which operates in the northwestern province of Son La, said mining companies had been paying various taxes and fees for environmental protection.
They included EPFs for liquid waste and water, waste rock produced during mining, compensation for site clearance, and charges to restore the environment after closure. Companies also had to pay royalties for mineral resources mined, and many other types of costs for environmental monitoring, and transportation of solid and hazardous waste.
“The collection of EPF should be balanced between the interests of the government and enterprises, while helping local environmental protection,” Anh said.
The MoF is also considering whether the EPF should be raised based on the quality of technology employed, value of minerals extracted or levels of pollution caused.
Under the existing Decree 74, the same EPF is set whether for valuable minerals or waste.
For example, according to the National Reserves Assessment Council, 2.57 per cent of the output at the nickel mine at Ban Phuc was useful metals, while the remaining 97.43 per cent was waste rock.
The Vietnam Business Forum’s (VBF) Mining Group raised the issue that if the EPF was applied on raw mineral ore production, the enterprise would pay VND50,000 ($2.38) per tonne whether extracted metal or waste rock. With a capacity of 360,000 tonnes per year, 97.43 per cent of its output was equivalent to 350,748 tonnes of waste rock, making it liable to pay a respective EPF for VND17.5 billion ($833,330) per year.
This would mean that in order to extract 9,252 tonnes of metals following processing, the business would pay an EPF for the entire 360,000 tonnes of ore, which is mainly waste rock.
“Through this form of EPF calculation, larger industrial-scale mine and quarrying activities actually end up paying more,” Anh said. “If such an EPF is collected, it would mean large firms carry a three times higher production cost burden, making large enterprises unable to compete in the market in terms of prices for the same product. This would actually encourage the development of small-scale mining models, contrary to the government’s policy.”