Over-extraction of river sand in the VMD

Sedimentation quantities in the VMD should be re-assessed, a project (outside the scope of this report) understood to be currently underway. This is necessary in order to introduce a permitting regime within the river sedimentation budget and to better assess and promote alternative sand supply options.

Mining and environmental legislation and regulation in Viet Nam

The Consultants suggest that the National Mining Law of 2010 could include specifics like:

• Vesting river sand mineral ownership (or at least permitting rights) of river aggregates in the State at central level (if not already done) and to remove any permitted development rights for river sand.
• Introduction of a single Lower Mekong Delta-wide process where the central permitting authority identifies clearly designated blocks (with 3-D spatial specifications and requirements such as timing, extraction methodology, restoration, management systems, reporting etc) with each block auctioned by a transparent process but only for certified “responsible operators”, who would have to be certified following a rigorous qualification process and lodging of tendering and operational bonds (the former repayable if not successful or on completion of the extraction and restoration of the river sand block). The certification scheme could potentially be created and run with the assistance of a professional aggregates association.
• A presumption against excessive river sand extraction with allowance for the central licensing body or Ministry to authorize extraction with strict limits on VMD extraction in a particular zone to not to be greater than the recharged volumes in each year and higher royalties throughout the delta.
• Where the authority decides to permit specific blocks of river sand for extraction, only certified “Responsible Operators” (see below) would be allowed to bid in a transparent online auction, access to which would require both a non-refundable tender bond and a commitment to depositing of a rehabilitation bond if the bid is successful.
• A significantly reinforced and rigorously implemented criminal sanction scheme for illegal mining activity with much higher financial penalties, confiscation of equipment and imprisonment for offenders and under-reporting of volumes and evasion of royalties and other taxes.
• Introduction of a “Responsible Operator” certification scheme for companies to allow them to bid for river sand permits. Only such Responsible Operators would be allowed to conduct extraction operations using equipment which would also have to approved by the authority.
• Enforcement of accurate extracted volume reports and payment of a centrally-stipulated standard royalty for every ton extracted, which adequately internalizes externalities (with exemptions for manufactured sand, recycled aggregates and wastes used for land raising).
• Introduction of a “Responsible Sourcing” certification scheme for construction aggregates and land raising materials. These would have to accompany any supply of such materials, failure by construction project developers to be able to produce certificates for materials used would be punishable by fines.
• Royalties, fines and the proceeds of auctions could be paid to the regulatory authority to internalize the externalities of sand mining and be hypothecated for use in Lower Mekong Delta protection activities (including funding of: (1) the personnel and operating costs of the authority, (2) monitoring and enforcement activities, (3) the costs of the LMD Sand Project, Leader (see later), as well as (4) financial incentives to communities who actively work against illegal extraction – maybe as some form of monitoring grant per km for communities on each side of the rivers). Crucially, these additional costs would also aim deliberately to drive up the price of river sand (thereby making alternatives more economically attractive).
• For discussion, the target additional costs should result in the price of river sand delivered to construction sites in the MKD to be at least equal to that of M-sand transported (probably by sea and waterway) from rigorously permitted and monitored fixed point hard rock quarries located in the middle and north of the country. The latest data on rising VMD sand prices indicates that that such alternative sourcing of sand could now become commercially attractive.

While Article 82 of the 2010 Law defines the Ministry of Natural Resources and Environment as the competent overall authority, provincial-level people’s committees may currently grant mineral exploration licenses and licenses for mining of minerals for use as common construction materials. The consultants suggest that there should be only one single regulatory and permitting authority. This should be a supra-provincial level, for example, MoNRE or MARD or a new river basin authority – which could also include control (or at least co-ordinate the activities of relevant ministries and government organizations) over other activities, such as fish farming, dams, tourism, riverbank development etc. to circumvent regulatory and monitoring avoidance and other unintended edge effects where provincial boundaries run along watercourses.

The consultants agree with the Government Resolution 120 of 2017, but would suggest the need to draw on experience in other river basins. Firstly, coordinating all actions under one regional or national authority. A first step to which has now been taken with the creation of a Mekong Coordination Council⁽²⁰⁾ to regulate sand mining extraction regulatory activities. Secondly, with an additional focus being provided by a high-level, respected project leader who could ensure informed and constructive alignment, unblock impediments at high level, champion changes to legislation, regulation, norms and standards, co-ordinate effective communication strategies to promote the usage of alternatives to river sand and lead interactions with other upstream nation states, whose activities can also affect the VMD environment and sand recharge situation. The high level champion would need access to the highest levels of Government capable of resolving issues and cutting through red tape to champion benign changes in legislation etc. and to lead interactions with upstream Governments.

As regards the Government Decree 36/2020, the consultants see that penalties defined in legislation is a positive step. However, the level of fines and penalties are modest and do not represent significant disincentives to irresponsible or illegal behavior. For example, the maximum fine for an organization is stipulated at €72,800. As a maximum, this is a relatively inconsequential sum and may be viewed as a “cost of doing business” by an irresponsible operator. It is suggested that more draconian measures are contemplated to provide a real and meaningful deterrent to illegal and/or irresponsible behavior. Such measures could include:

• Immediate Cease and desist Order for the affected site and operator.
• Withdrawal (or suspension) of the Responsible Operator certificate.
• Confiscation of the extractive, treatment and transportation equipment of the operator.
• Fines to have both a minimum and maximum absolute amount (but at much higher levels, say a minimum of VND10bn and a maximum of VND100bn).

Greater certainty that operations will be carried out legally, responsibly, in line with permit conditions can be achieved by a central certification of Responsible Operators using specific and measurable criteria for qualification, which alone would be permitted to bid for mining blocks. Responsible Operator status would allow an organization to have access to profitable, but strongly regulated and controlled, river extraction activities. Withdrawal of such a certificate would have profound commercial and financial implications for a company.