VIETNAM — MINING SECTOR — ON THE DOWN LOW — Lawyer in Vietnam Dr. Oliver Massmann interviewed by Michael Schwartz from Materials World

1. VIETNAM — MINING SECTOR — ON THE DOWN LOW — Lawyer in Vietnam Dr.
Oliver Massmann interviewed by Michael Schwartz from Materials World
Despite a lack of information, trade agreements and foreign investment suggest Vietnam's mining sector is
in good health. Michael Schwartz talks to two experts on why the country is set to become a major player.
Vietnam boasts a host of minerals but is primarily associated with coal and bauxite. Its other minerals
include copper, oil and gas. The coal is managed by the Ministry of Natural Resources and Environment,
and features heavily in domestic power, while the US Geological Survey estimates the bauxite reserves to
be some of the most extensive anywhere. Both minerals are mined by the state-owned Vietnam National
Coal-Mineral Industries Group (Vinacomin).
This article looks at both the challenges and the opportunities for Vietnamese mining, and is based on
interviews with Patrick Chang, Head of Corporate Development at Blackstone Minerals, a nickel-focused
mining and exploration company headquartered in West Perth, Australia, and Dr Oliver Massmann, General
Director of legal firm Duane Morris Vietnam LLC. Massmann has 20 years of experience as a commercial
lawyer in Vietnam, is a member of the Supervisory Board of PetroVietnam Insurance JSC and is the only
foreign lawyer presenting in Vietnamese to members of the National Assembly of Vietnam.
Duane Morris Vietnam LLC’s establishment of offices in both Hanoi and Ho Chi Minh City recognises
Vietnam’s status as one of the fastest growing economies in the world, not least as the country is attracting
operations and investments from multinational corporations operating in Asia, as well as businesses seeking
to establish investments in the continent.
Setting the scene, Chang says, “While coal and bauxite are significant in the mining sector in Vietnam, the
country also produces many other metals, including tungsten (as the second largest producer in the world),
mineral sands, iron ore, copper, gold and other metals.
A meaningful amount of nickel will be produced once our operation is under way (currently planned for
2023).”
While Massmann goes on to explain that there are no financial/tax incentives available for the mining
industry. The corporate income tax rate is 22%, except when the enterprise has a total annual revenue of
more than US$867,549.55, in which case a tax rate of 20% is imposed.
Corporate income tax applicable to the search, exploration and extraction of oil and gas and other rare and
precious resources in Vietnam ranges between 32 and 50%. With regard to oil and gas prospecting,
exploration and exploitation activities, the country’s Prime Minister determines a specific tax rate suitable
for each project or each facility, based on the location, exploitation conditions and field reserves, at the
request of the Minister of Finance.
“For platinum, gold, silver, tin, wolfram, antimony, gemstones and rare earth resources mines, the tax rate
of 50% is applicable for mines where 70% or more of the mining area is located in areas with difficult
socio-economic conditions,” notes Massmann.

2. Lack of information
One criticism levelled against Vietnamese mining is lack of information. Massmann reflects that there is
little in the way of press reports, news, or any other kind of medium about the mining industry in Vietnam.
There are general reports on the performance of industry and trade issued by the Ministry of Industry and
Trade (MOIT), i.e, reports not specifically for mining and which might be updated monthly, annually or
over a five-year period.
Chang adds that there is a differentiation between operations owned by Western countries, for which there
is good information/data, and most Vietnamese mining operations that do not have any incentive to publish
their data. He points out that “Vietnamese mining law is currently under review with the relevant
government authorities actively seeking input from government and private mining entities”.
Massmann stresses, however, that the Vietnamese Government highly encourages Foreign Direct
Investment (FDI) through its commitments inter alia to the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA) and the UK-Vietnam
Free Trade Agreement (UVFTA).
He describes EVFTA as "the most comprehensive and ambitious trade and investment agreement that the
EU has ever concluded with a developing country in Asia and which, since its effective date on 1 August
2020, has intensified bilateral relations between Vietnam and the EU.
"Coupled with the trend of investors continuously withdrawing capital and production out of China in the
recent months, due to the country's political instability and poor reaction to COVID-19, EVFTA plays an
important part in turning Vietnam into the manufacturing hub of Asia".
He continues, "Under the agreement, Vietnam has not only opened additional sub-sectors for EU service
providers, but also made commitments deeper than those outlined in the World Trade Organisation
Agreements or CPTPP, offering the EU the best possible access to Vietnam's market. Specifically, Vietnam
has eliminated import duties on 48.5% of tariff lines, equivalent to 64.5% of EU exports immediately after
the agreement came into effect. In 10 years, import tax on nearly all 100% of Vietnam's exports to the EU
will be eliminated."
Chang echoes Vietnam's active commitment to attracting FDI.
"This was emphasised in all business forums we attended [in 2020]. The country has signed several trade
agreements in recent years to provide clarity and certainty to investors, including the Regional
Comprehensive Economic Partnership (RCEP), CPTPP [and] FTAs with Korea and the UK, TA with the
EU, and the economic partnership with Japan to name a few. There are various tax incentives for
corporations investing in Vietnam subject to quantity, sector and other factors."
Regarding plans for joint ventures (JVs) between government- owned mines and other investors, Massmann
touches on their diversity - they do not concentrate on coal and bauxite. He says, "All mines in Vietnam are
government-owned. According to the latest update from the Vietnam Association of Small and Medium
Enterprises dated September 2019, there are approximately 20 JVs between the Vietnamese Government

3. and foreign investors, with the lowest investment capital being US$1 bln. The list does not specify which
countries such investors come from."
Pictured: A Cargo ship leaving Da Nang Port, Vietnam. The market for minerals in Vietnam will most
likely serve domestic demand, with export only contributing a small part
Battery power
Blackstone Minerals Ltd is developing northern Vietnam's Ta Khoa project with its nickel-copper-platinum
group element (PGE) resources. Located 160km west of Hanoi, Ta Khoa has existing modern mine
infrastructure with a 450kt/y processing plant at present on a care-and-maintenance basis and will become
a mine-to-market enterprise producing downstream nickel products for lithium-ion batteries.
The company has now completed a scoping study for Ta Khoa, intended as an initial platform on which to
start the mine's development. Pre-feasibility studies continue. Highlights to date are as follows:
 A maiden resource for Ban Phuc comprising an indicated resource of 44.3Mt at 0.52%
nickel for 229kt nickel, and an inferred mineral resource of 14.3Mt at 0.35% nickel for
50kt nickel
 Annual production of ~12.7kt/y of nickel over an ~8.5-year project life
 Gross revenue of US$2.95bln-US$3.6bln
 Net pre-tax cashflow of US$1.03bln-US$1.37bln
 Pre-production capital cost of ~US$314mln including contingency
 Pre-tax cashflow of US$155mln/y-US$210mln/y
 Pre-tax Net Profit Value (NPV) at 8% of US$550mln-US$780mln and internal rate of
return (IRR) 38-50% with capital payback period of ~2.5 years
Regarding the ultimate estimation of minerals from Ta Khoa, Chang says, "We plan to produce a product
suitable for making electric vehicle batteries. The current plan will see our products shipped to South Korea.
However, this is a rapidly evolving market, and it is possible that our nickel will end up being consumed
domestically in an electric vehicle battery as a number of South Korean firms have expressed interest to
establish battery plants."
He adds, "The Son La province, where our operation is located, is one of the poorest regions in Vietnam
and has a large percentage of minority populations...[We have] been actively engaging the host
communities and continue to sponsor a number of initiatives."
Massmann believes that, more generally, the market for minerals in Vietnam will mostly serve domestic
demand, with export only contributing a small part.
When it comes to transportation, Blackstone Minerals expects to transport the nickel products by truck,
although attention will also turn to the possibility of using barges.

4. And on the topic of mining machinery, Massmann states that Vietnam has two business lines categorised,
the first being the manufacture of special-purpose machinery and the second being manufacture of
machinery for mining, quarrying and construction.
Chang explains, "Vietnam possesses a high capability in construction and fabrication sectors that actively
contribute to the mining sector. Companies such as Hoa Phat produce a range of mining machinery.
Vietnam is also well-serviced, being adjacent to China. We are evaluating importing mining equipment
from China and/or Western countries."
While information on Vietnamese mineral deposits and mining operations can be difficult to come by, the
large number of FDI-funded projects in Vietnam and the country's great willingness to sign TAs
demonstrates its ambition to become a key Asian mining player.