Indonesia

As discussed above, under the Mining Law 2009, IUPs are divided into two main categories:

• Exploration IUP - which encompasses the activities of general survey, exploration and feasibility study.
• Production Operation IUP - which encompasses the activities of construction, mining (exploitation), processing and refining, as well as transportation and sale.

Details of the project life cycle are as follow:

• Exploration IUP
  • For ferrous minerals, is valid for a maximum period of eight years, which covers an area between 5,000 to 100,000 hectares.
  • For coal, is valid for a maximum period of seven years, which covers an area between 5,000 hectares to 50,000 hectares.
  • For non-ferrous minerals, is valid for a maximum period of three years (or seven years for certain non-ferrous minerals), which covers an area between 500 to 25,000 hectares.
  • For rocks, is valid for a maximum period of three years, which covers an area between five to 5,000 hectares.
• Production Operation IUP
  • For ferrous minerals, is valid for a maximum period of 20 years and extendable twice for ten years on each extension, which covers a maximum area of 25,000 hectares.
  • For coal, is valid for a maximum period of 20 years and extendable twice for ten years on each extension, which covers a maximum area of 15,000 hectares.
  • For non-ferrous minerals, is valid for a maximum period of ten years (or 20 years for certain non- ferrous minerals) and extendable twice for five years on each extension (or ten years on each extension for certain non-ferrous minerals), which covers a maximum area of 5,000 hectares.
  • For rocks, is valid for a maximum period of five years and extendable twice for five years on each extension, which covers a maximum area of 1,000 hectares.

The holder of an Exploration IUP, who is in compliance with the obligations under its Exploration IUP, is guaranteed to obtain a Production Operation IUP as a continuation of its mining business activities. This provides investor certainty of tenure over the period of the licence, which is considered to be necessary to encourage investment.

Mongolia

The project cycle in Mongolia is as follows:

• Exploration Licence

  This licence is granted on a first-come-first-served basis for a period of three years, extendable for two further periods of three years each.

  It allows the licence holder to conduct exploration for minerals within the boundaries of the specifically delineated area and requires the holder to have a minimum spend on exploration works. There is no limit on the number of Exploration Licences that can be held by a legal entity.

• Pre-mining Licence

  If a mineral reserve has been located, defined and recorded, an Exploration Licence holder may apply for a Pre-Mining Agreement to conduct feasibility studies, mine development and commence production, the duration of which will be no longer than three years following the expiration of the exploration licence.

• Mining Licence

  Only an Exploration Licence holder may apply for a Mining Licence, which is granted for a period of 30 years, extendable twice for 20 years each time. Annual fees for Mining Licences go up to US$15/ha.

  As the name implies, a Mining Licence allows the licence holder to engage in mining of minerals, conduct exploration within the mining claim, as well as sell and export the minerals at international market prices.

• Approval to commence mining operations

  Before mining can be commenced, official sign-off is required from a senior official from MRAM and a local province to ensure that all documents and pre-mining requirements are compliant with the law.

• Investment Agreement (IA)

  This is an instrument facilitating the dialogue between the government and investors. An IA is available for Mining Licence holders undertaking an investment of more than US$50 million during the first five years of a project. The agreement sets out agreed tax rates, mineral royalties and financing arrangements. The term of an IA is heavily dependent on the amount of the investment. If the investment amount over the first five years is:

  • No less than US$50 million, the term of the IA is ten years.
  • More than US$100 million, the term of the IA is 15 years.
  • More than US$300 million, the term of the IA is 30 years.

More importantly, a well negotiated IA can override legislative provisions and bring stability to investors already exposed to enormous geological risks and vast expenses in conducting exploration.

Vietnam

Under the Mineral Law 2010, the project life cycle for each licence is as follows:

• Exploration Licence

  A mineral Exploration Licence entitles the holder to undertake activities to identify mineral deposits, quality and obtain other information for mineral mining.

  A mineral Exploration Licence is valid for a period of 48 months, and may be extended multiple times for a total further period of 48 months. However, on each extension the organisation must return at least 30% of the exploration area stated in the licence.

  The size of an exploration area for certain minerals is as follows:

  • A maximum of 50 square kilometres for gemstone, semi-gemstone and metallic minerals (except bauxite).
  • A maximum of 100 square kilometres for coal, bauxite and non-metallic minerals on land (except minerals for common construction materials).
  • A maximum of 200 square kilometres for all types of minerals in the continental shelf (except minerals for common construction materials).
  • A maximum of 2 square kilometres on land or 1 square kilometre on water surface areas for minerals used for common construction materials.
  • A maximum of 2 square kilometres for mineral water and thermal water.
• Mining Licence

  A Mining Licence entitles the holder to undertake activities to recover minerals, including conducting construction of mine infrastructure, excavation, classification, enrichment and other activities.

  A Mining Licence is valid for a maximum period of 30 years, and can be extended multiple times for a total extension period of 20 years. A Mining Licence can be transferred to a third party, for the remainder of the licence period, subject to the approval of the government. A Mining Licence will be revoked if the licence holder has not built mine infrastructure within twelve months of the date of the licence, or failed to conduct mining within twelve months of the proposed date of commencement.

  The size of a Mining Licence area will be the size of the area that has been previously explored and for which the mineral reserves have been approved (in accordance with the master plan) and a mining investment project has been prepared for that area.

Western Australia>/p>

The following types of mining tenements can be granted under the Mining Act 1978:

• Prospecting Licence

  A Prospecting Licence entitles the holder to: (i) enter the land for the purpose of prospecting for minerals; (ii) prospect for minerals; (iii) excavate, extract or remove any mineral bearing substances (up to a maximum 500 tonnes); (iv) subject to the Rights in Water and Irrigation Act 1914 (WA), take and divert any water situated in or flowing through the land for the purpose of prospecting for minerals and sink a well or bore on such land and take water from it for domestic purposes or for the purposes of prospecting for minerals.

  A Prospecting Licence is valid for an initial period of four years and is extendable for another period of four years. A further extension of four years is available if the licence has obtained retention status. The area of one prospecting licence must not exceed 200 hectares. A person can be granted more than one Prospecting Licence.

• Exploration Licence

  An Exploration Licence entitles the holder to: (i) enter the land for the purpose of exploring for minerals, including digging pits, holes and trenches and sinking bores and tunnels; (ii) explore for minerals; (iii) excavate, extract or remove any mineral bearing substances (up to a maximum 1,000 tonnes unless the Minister approves a greater amount); (iv) subject to the Rights in Water and Irrigation Act 1914 (WA), take and divert any water situated in or flowing through the land and to sink a well or bore on such land and take water from it for domestic purposes or for the purposes of exploring for minerals.

  An Exploration Licence is valid for an initial period of five years and extendable for a further period of five years. Subsequently, a further extension of two years may be granted. Based on a graticular boundary (or block) system introduced in 1991, the size of an Exploration Licence is between one block to 70 blocks (within the known mineralisation zone) or between one block to 200 blocks (outside of the known mineralisation zone). There is no limit on the number of Exploration Licences a person can hold. An Exploration Licence holder has the right to apply for, and to have granted, one or more Mining Leases in respect of any part or parts of the Exploration Licence area.

• Retention Licence

  A Retention Licence is a “holding” licence for a mineral resource that has been identified under a Prospecting Licence, Exploration Licence or Mining Lease, but cannot be further explored or mined for one or more of the following reasons: (i) the resource is uneconomic or subject to marketing problems; (ii) the resource is required to sustain the future operation of an existing or proposed mining operation; (iii) there are existing political, environmental or other difficulties in obtaining requisite approvals. A Retention Licence entitles the holder to: (i) enter the land for the purpose of further exploring minerals; (ii) further explore for minerals; (iii) excavate, extract or remove any mineral bearing substances (for a maximum of 1,000 tonnes in total); and (iv) subject to the Rights in Water and Irrigation Act 1914 (WA), take and divert any water situated in or flowing through the land and to sink a well or bore on such land and take water from it for domestic purposes or for the purposes of exploring for minerals.

  A Retention Licence is valid for a period not exceeding five years and may be renewed by the Minister for a further period not exceeding five years. A Retention Licence covers the whole or any part of the land within the boundaries of the Prospecting Licence, Exploration Licence or Mining Lease.

• Mining Lease

  A Mining Lease entitles the lessee and its agents and employees to: (i) work and mine the land for any minerals (unless the Minister prescribes that only a specified mineral can be mined); (ii) take and remove any minerals and dispose of them; (iii) subject to the Rights in Water and Irrigation Act 1914 (WA), take and divert any water situated in or flowing through the land and to sink a well or bore on such land and take water from it for domestic purposes or for any purpose connected with mining for minerals; and (iv) do all acts and things that are necessary to effectually carry out mining operations.

  A Mining Lease is valid for an initial term of 21 years and is renewable as of right for a further term of 21 years. Thereafter, the Minister may renew the Mining Lease for successive terms of 21 years. The area of a Mining Lease is related to an identified orebody as well as an area for infrastructure requirements. A person may be granted more than one Mining Lease.

These licenses are linked to one another, reflecting the policy to link the various stages of the project life cycle as closely as possible, so that investors can have confidence on progressing from one stage to the next and have the strongest possible reassurances that their initial investment will be rewarded if the resources are found.

Foreign ownership

Indonesia

As discussed above, a dual system was used under the Mining Law 1967, where domestic investors were investing in companies holding KPs, while foreign investors were investing in companies holding Contracts of Work.

Under the Mining Law 2009, both domestic and foreign investors can invest directly in companies that hold IUPs. There is no longer a distinction between domestic and foreign investment.

The Mining Law 2009 permits foreign investors to hold up to 100% of the shares in a company that holds an IUP, subject to a later divestment to central or regional government, government-owned enterprise or wholly-owned Indonesian company. The initial divestment requirement introduced in 2010 was 20% on the 6th year of production. The policy was changed in February 2012, and Indonesian parties must now own 20% of the shares starting on the 6th year of production increasing gradually to 51% on the 10th year of production. Separately, preserved Contracts of Work have their own divestment requirements under the provisions of their Contracts of Work.

Under the Investment Law 2007, the BKPM is the administering body for every foreign investment in Indonesia, where every proposed foreign investment in Indonesia must obtain prior approval from the BKPM. As previously mentioned, the BKPM sets out the minimum capital requirements for every sector open for foreign investment, including the mining sector. From time to time the BKPM review and revise its policy on the minimum capital requirements. However, there is no threshold for obtaining an approval from the BKPM, which means that every foreign investment must obtain approval from the BKPM.

Mongolia

With rising prices of raw materials, from which huge revenues could have been raised in the early 2000s, the Mongolian government thought that it was time to maximise its autonomy over mining projects, a stark contrast to the Minerals Law 1997.

As such, extensive state equity participation rights were introduced under the Minerals Law 2006, giving the government a right to a 34% stake in projects, where it provided no funding, and a 50% stake in projects involving state funding, where such projects involved minerals of “strategic importance”. This was defined, for the first time by reference to national security, in addition to other factors including economic and social developments as well as production levels. Despite the existence of the Strategic Deposits List, this has given the government autonomy in determining what is of “strategic importance”.

However, it is possible to enter into negotiations with the government as to the form and amount of state participation through an IA as explained above. In fact, the IA between Ivanhoe Mines and Rio Tinto for the Oyu Tolgoi project, which took six years to negotiate due to the ever widening gap between the investors and government, legislative changes and the influence of the global financial crisis, paved the way for parliamentary changes in this field, by allowing the government to obtain a 34% stake generally and a 50% stake after the first 30 years, giving investors time to recoup their initial outlay.

The Law on the Regulation of Foreign Investment in Business Entities Operating in Sector of Strategic Importance, passed by Parliament in May 2012, introduces a scheme of approvals necessary for incorporation of a business entity or acquisition of shares of a company in Mongolia in relation to state-owned and private investments, with the former being more onerous.

An approval from the Foreign Investment and Foreign Trade Agency (FIFTA) is required for any transaction by a foreign investor that will:

• Provide the right to acquire one third or more of the shares of a business entity operating in sectors of strategic importance (Business Entity of Strategic Importance - BESI).
• Provide the right to appoint the majority of the management or board of directors.
• Provide the right to veto the management’s decision.
• Provide the right to exercise a management role or determine management decisions.
• Create a monopoly in an international or domestic commodities market.
• Affect the market and price of mining products exported from Mongolia.
• Dilute the shareholding of a foreign investor.

The most notable provision requires foreign investors for any acquisition to obtain approvals from FIFTA and subsequently the Parliament, to acquire a stake of more than 49% in a BESI worth in excess of 100 billion tugriks (or approximately US$76 million). The mineral sector is classified as one of the sectors of strategic importance.

Vietnam

MONRE is responsible for formulating the mineral strategy of the country, including preparing the mineral master plan and identifying mineral areas, to granting exploration and mining licences and reviewing geological surveys.

People’s Committees are responsible for introducing state regulations on: (i) management and protection of minerals; (ii) identifying areas to be banned or temporarily banned; (iii) formulating and submitting to the government for approval local master plans on exploration, mining and utilisation of minerals; (iv) granting licences; (v) approving the lease of land for mineral activities; and (vi) protecting the local environment.

Foreign participation in mining projects is regulated by the Enterprises Law 2005 and the Investment Law 2005. Under the Investment Law 2005, mining is one of the sectors in which investment is subject to conditions. It will only be permitted subject to specific conditions as stipulated by the law. Accordingly, an evaluation must be performed for issuance of an investment certificate. Investment in the mining sector must be implemented in accordance with the Mineral Law 2010, which means that it must comply with the master plans for use of minerals and other natural resources prepared by MONRE.

There is no mandatory requirement for government or national participation in mining projects, although in practice it is the ultimate owner of the land.

Western Australia

The Mining Act 1978 does not distinguish between domestic investors and foreign investors. Nonetheless, Australia exercises some control over foreign investment through the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA). The FATA is administered by the Foreign Investment Review Board (FIRB) and the Australian Treasurer. In essence, proposed major investments by foreigners in Australia must be referred to FIRB for review and are subject to approval from the Australian Treasurer.

The proposed investments which must be referred to FIRB include:

• The acquisition of a ‘substantial interest’ in an Australian company or business, where the acquisition transaction values the company or business at more than AU$244 million. Under FATA, substantial interest is where a person, alone or together with any associate or associates of the person: (i) is in a position to control not less than 15% of the voting power or potential voting power in a company; or (ii) hold 15% of the issued shares in a company. Aggregate substantial interest is where two or more persons, together with any associate or associates of any of them: (i) are in a position to control not less than 40% of the voting power or potential voting power in a company; or (ii) hold 40% of the issued shares in a company.
• The acquisition of any interest in an Australian urban land corporation or trust. A land corporation or trust is deemed to be an urban land corporation or trust if it holds more than 50% of its assets in Australian urban land (that is, non-rural land). Interests in Exploration Licences exceeding five years and Mining Leases are generally deemed to be interests in Australian urban land.

While a proposed investment may not be compulsorily referred to FIRB, the Australian Treasurer has the power to declare that the proposed investment is contrary to Australia’s national interest and to prohibit the investment or require divestment. Due to the significant consequences that follow if such a declaration is made, many foreign investors voluntarily refer their proposed investments to FIRB for review.

Payment obligations

Indonesia

The Mining Law 2009 creates a benchmark pricing system for minerals and coal which has the effect that royalty will always be calculated based on the actual sales price if it is higher than the benchmark price, or at the benchmark price if it is lower than the benchmark price. The benchmark prices for coal are compiled on a monthly basis from four indices: Indonesia Coal Indonesia (ICI), Newcastle Export Index (NEX), Newcastle Global Coal Index (NGC) and Platts 1.

Under the Mining Law 2009, the holders of IUPs are required to pay deadrent and/or royalties to the government. These payments are different than tax and categorised as Non-Tax State Revenue (Penerimaan Negara Bukan Pajak - PNBP). The government determines the applicable tariffs for deadrent and royalties payable in the mining sector and these tariffs are being reviewed and amended from time to time.

The formula to calculate deadrent is the size of the IUP area x the applicable tariff, while the formula to calculate royalties is the amount of mining commodity sold (in tonnes) x sale price per tonne x the applicable tariff. The applicable tariffs for deadrent and royalties are set out in a separate Government Regulation. For the purpose of calculating royalties, the sale price is taken to be the free on board (FOB) sales price.

In addition to payment of deadrent and royalties, the Minister of Finance introduced a new export duty tariff of 20% for certain types of ferrous minerals, non-ferrous minerals and rocks. The 20% export duty will be calculated based on the export benchmark price determined by the Minister of Trade periodically.

Mongolia

Under the Minerals Law 2006, a licence holder is required to pay licence fees and/or royalties.

The holder of an Exploration Licence must pay an annual licence fee for each hectare within the exploration area, with the following rates: (i) US$0.1 for the first year; (ii) US$0.2 for the second year; (iii) US$0.3 for the third year; (iv) US$1.00 for the fourth to sixth years; and (v) US$1.50 for the fifth to ninth years. The holder of a Mining Licence must pay annual licence fee for each hectare within the mining area in the amount of US$15, while the fee for coal and other common mineral resources is US$5 for each hectare.

The royalty payment obligations in Mongolia are based on standard flat rate royalties and new surtax royalties. Standard flat rate royalties are payable on the sale of coal (and common minerals) and other minerals (e.g., gold, copper, zinc) at 2.5% and 5% respectively. This is supplemented by the new surtax royalty scheme recently incorporated into the Minerals Law 2006. The rates of the surtax royalty vary from 1% to 30%, depending on the market price, type of mineral and scale of processing of the minerals and are applied in addition to the standard flat rate royalty mentioned above. However, it is still unclear at which stage of the process the surtax royalty rates will be imposed, how the market price will be determined and how the tax will be collected. This new surtax royalty scheme replaced the draconian Windfall Profits Tax of 68% which used to be imposed on the portion of metal sales price. This was applied on copper (above US$2,600/ton) and gold (above US$500/ounce).

Vietnam

There is no benchmark pricing system under the Mineral Law 2010.

Under the Mineral Law 2010, a mining company must pay a fee for a mining right to be granted, either the mining right is obtained through auction or through selection by the competent state agency. The fee for the mining right will be based on the price, deposit, quality and type of minerals and the mining conditions.

The calculation of royalties is regulated in a separate regulation, being Law on Royalties of 2009 (the Royalties Law 2009). Under the Royalties Law 2009, the minerals output used to calculate royalties is the quantity, weight or volume of minerals actually exploited in a royalty period. The royalty-liable price will be the company’s selling price of a unit of minerals product, exclusive of value added tax. The Royalties Law 2009 also provides the royalty rates for each type of mineral (metallic or non-metallic), which vary from 3% to 25%.

Western Australia

Unlike other countries, including Indonesia, Western Australia does not have a benchmark pricing regime requiring mining companies to sell minerals at or above benchmark prices prescribed by the government.

In Western Australia, the holder of a mining tenement must pay annual rent to the Western Australian Government. The amount of rent depends on the type of mining tenement held, the size of that mining tenement (hectares or blocks) and the term of that mining tenement.

The holder of a mining tenement must pay royalties to the Western Australian Government for all minerals derived from mining operations. There are three types of rates of royalty payable under Mining Regulations 1981:

• An amount per tonne according to quantity produced or obtained.
• An amount equal to a prescribed percentage of the ‘royalty value’.
• A specific rate (as provided under Section 86 of Mining Regulations 1981).

The formula to calculate royalty value is the gross invoice value (quantity of mineral x price of mineral) - allowable deductions.

Mining services

Indonesia

In contrast to the Mining Law 1967, under the Mining Law 2009 a mining services provider can only provide:

• Consultation, planning and testing of equipment in the fields of mining (exploitation), or processing and refining.

• Consultation, planning, implementation and testing of equipment in the fields of general survey, exploration, feasibility studies, mining construction, transportation, mining environment, post-mining, reclamations and occupational health and safety.

This means that a mining services provider can no longer provide the services of mining (exploitation) as well as processing and refining. Further, priority must be given to local or national mining services companies (i.e. wholly-owned Indonesian) and a foreign-owned mining services company can be engaged only if the tender process result shows that there are no suitable local or national mining services companies available to perform the required services. Moreover, certain process and conditions must be satisfied before the Director General of Minerals and Coal (on behalf of the Minister of Energy and Mineral Resources) will grant its approval for the utilisation of an affiliated entity to provide mining services.

Mongolia

The Minerals Law 2006 does not specifically provide for the regulation of mining services or providers of such services. It is possible that this may be attributed to the early state of the mining laws in Mongolia. It is expected that these may be introduced with time, given the newfound trend of increased regulation, and the current review of the law may spark discussion in this area.

Vietnam

The Mineral Law 2010 specifies that any holder of an Exploration Licence or a Mining Licence must be approved by the government, have sufficient professional experience, personnel and equipment and be properly established either as an independent legal entity or a contractual joint venture with a Vietnamese entity or the state. There is no distinction between providing services and carrying on exploration or mining activities.

Western Australia

There is no provision in the Mining Act 1978 or the Mining Regulations 1981 specifically regulating mining services providers. Under its mining services agreement with the mining tenement holder, however, the mining services provider is generally required to ensure that in providing its services it will comply with all laws (including the Mining Act 1978 and Mining Regulations 1981) and ensure that the terms and conditions of the mining tenement are not breached.

Environment

Indonesia

It is a requirement under the Mining Law 2009 that a Production Operation IUP cannot be issued unless the Environmental Impact Analysis (Analisis Mengenai Dampak Lingkungan - AMDAL) of a company has been approved. Indonesia’s Law No. 32 of 2009 on Environmental Protection and Management (the Environmental Law 2009) requires every business that will have a significant impact on the environment to produce an AMDAL and subsequently obtain an Environmental Licence.

There are certain kinds of projects and sub-projects which are not required to meet the full AMDAL requirements, but nevertheless are still required to undertake Environmental Management Efforts (Usaha Pengelolaan Lingkungan - UKL) and Environmental Monitoring Efforts (Usaha Pengawasan Lingkungan - UPL). Regulation of the State Minister for the Environment provides a list of business/activities which are required to produce an AMDAL. Those involved in exploitation, processing and refining activities are required to produce an AMDAL, while those involved in exploration are not required to produce an AMDAL.

An Environmental Licence is valid for the same period as the main business licence, and an application to amend an Environmental Licence must be made for certain changes of the business of a company (which include change of ownership). An Environmental Licence will also specify a number of additional licences, which are normally required under the subordinate legislations of the Environmental Law 2009, such as a licence for the disposal of waste water or a licence to store and transport hazardous and toxic materials.

The holders of IUPs are also required to conduct reclamation and post-mining. A reclamation plan during exploration activities must be prepared as part of the work plan and budget prior to undertaking exploration activities. A reclamation plan and a post-mining plan for production operation are required to be submitted together with the application to obtain a Production Operation IUP. The holders of IUPs are also required to deposit reclamation bonds and post-mining bonds in a government’s bank. If the holders of IUPs fail to satisfy their reclamation plan and post-mining plan, the government is entitled to appoint a third party to undertake reclamation and post-mining activities by using the bond.

Mongolia

Mongolia’s environmental laws go towards regulating the relationship between the state, ordinary people and businesses to protect the environment, use and restoration of resources. Of particular significance is the Environmental Protection Law of 1995, as amended in 2005 (the Environmental Protection Law 1995), which is enforced at both state and local levels. Under the Environmental Protection Law 1995, various environmental protection duties are imposed on businesses, namely to:

• Act in compliance with the legislation and any and all decisions of the government and local officials.
• Act in compliance with environmental standards, limits, and procedures.
• Supervise the implementation of the relevant laws and regulations within organisations.
• Create and maintain records on toxic substances, adverse impacts, and waste discharged into the environment.
• Communicate the measures taken to minimise or eradicate toxic chemicals, adverse impacts and waste.

Moreover, under the Minerals Law 2006, specific requirements are imposed on Exploration Licence holders to prepare an environment protection plan and report, whereas Mining Licence holders must prepare an environmental impact assessment in addition to the environmental protection plan. A licence holder cannot commence exploration or mining operation before obtaining an approval on its environmental protections plan and/or environmental impact assessment. Both sets of obligations try to deal with any adverse impacts the operation of the business may have on the environment.

In an effort to ensure parties take their responsibilities seriously and discharge their duties, the law imposes a further obligation on licence holders to deposit funds equal to 50% of their environmental protection budget in a special bank account established by the Governor, which is refundable on the condition that the licence holder has fulfilled the obligations in line with the environmental protection plan. If the measures outlined in such a plan are not met, the relevant authority will utilise the budget and implement the measures.

Vietnam

Under the Mineral Law 2010 and Environment Protection Law of 2005 (the Environment Protection Law 2005), every mining project is required to prepare and submit an environmental impact assessment report to the competent state agencies for approval. The environmental impact assessment report is prepared together with the feasibility study report. Mining projects can be approved and granted with investment licence, construction and operation permits after their environmental impact assessment report is approved by the competent state agencies. The environmental impact assessment report must be submitted, as part of the supporting documents, together with the application to obtain a Mining Licence.

For the purpose of prevention and mitigation of impact on the environment, the Mineral Law 2010 provides that mineral exploration and mining may be restricted in respect of those allowed to conduct exploration and mining, the amount of production, the period of mining and the areas, depth and methods allowed for exploration and mining. The Mineral Law 2010 requires mining companies to apply solutions and bear all costs for environmental protection, rehabilitation and restoration. These solutions and costs must be set out under the investment projects, environmental impact assessment report and environmental protection commitments approved by the competent state agencies. Prior to conducting mineral mining activities, mining companies must deposit environmental rehabilitation and restoration bonds. Exploration of toxic minerals requires a mining company to take measures to prevent environmental pollution and adverse effects on human beings. If it contains radioactive substances, they must also comply with the Law on Atomic Energy and other relevant laws.

Environment Protection Law 2005 requires mining companies to take measures to prevent and take action on environmental incidents. In addition, it also requires mining companies to comply with the following:

Moreover, storage and transportation of minerals must be in specialised equipment and securely covered so that it will not be dispersed into the environment.

For any changes on the volume, substance, start date, implementation period and completion time of a project, the relevant mining company must provide an explanation to the approving agency, and if necessary, prepare additional environmental impact assessment reports.

Western Australia

Under the Mining Act 1978, a mining proposal is defined as a document that:

• Is in the form required by the guidelines.
• Contains information of the kind required by the guidelines about proposed mining operations in, on or under the land in respect of which a Mining Lease is sought or granted.

A mining proposal must be submitted together with the application for a Mining Lease. Before a company can carry out mining operations, its mining proposal must be first approved by the Department of Industry and Resources. Part IV of the Environmental Protection Act 1986 (WA) (the Environmental Protection Act 1986) requires a mining proposal that is likely to have a significant impact on the environment to be referred to the Environmental Protection Authority for assessment.

In addition to project description, type of operation and detailed site plans, the Guidelines for Mining Proposal in Western Australia require a mining proposal to also specify: (i) the summary of potential environmental impacts and proposed management of those impacts; (ii) the consolidated list of environmental management and rehabilitation commitments; (iii) the existing conditions of the environment (which includes geology, character of water rock and tailings, soils and soil profiles, hydrology, climate, vegetation types and biological communities); (iv) the potential environmental impact and the proposed management of those impacts (which identifies all likely environmental impacts, including significant impacts requiring the implementation of special management procedures, and development of environmental management commitments necessary to minimise, control, and rehabilitate the significant impacts); and (v) a mine closure plan.

Once the mining proposal is approved, it will be imposed as a further condition of the relevant Mining Lease, and any environmental commitment made under the mining proposal will be a legally binding obligation and remain in force until complied with. The tenement holder may also be required to deposit an environmental bond before the mining proposal is approved, with the amount being calculated according to the type and area being disturbed by the proposed mining operation. The approval to start mining activities will not be given until a deposit of the correct bond is made. The state may have recourse to the bond if the holder of a Mining Lease fails to meet its environmental commitments.

Forestry

Indonesia

Under Indonesia’s Law No. 41 of 1999 on Forestry (the Forestry Law 1999), mining projects cannot be conducted in a Conservation Forest and only underground mining can be conducted in a Protected Forest, while both open-cut and underground mining can be conducted in a Production Forest.

A Borrow and Use Permit (Izin Pinjam Pakai) from the Minister of Forestry must be obtained to undertake mining operations in forest areas. The holders of Borrow and Use Permits are required to provide compensation, either in the form of payment of PNBP or of replacement land, depending on whether the forested area within the relevant province covers more than 30% of a river basin area, island and/or provincial area. The government sets out the tariff and formula to calculate the amount of PNBP payable annually (with actual calculations affected by the current situation each year). The maximum area which can be granted for a Borrow and Use Permit is 10% of a continuous area of forest. A Borrow and Use Permit is valid for a period of 20 years but may be extended for a period in line with an extension to the relevant IUP or Contract of Work.

Mongolia

The Mongolian Constitution of 1992 states that the forests are the property of the state. In an effort to protect the woodlands, the Forest Law, which was enacted in 1995, and amended in 2007 (the Forest Law 1995), prohibited clear-cutting of trees whilst at the same time establishing environmental protections and strong enforcement mechanisms.

However, with an increase in mining, Mongolian wilderness, totalling around 11% of the total land area was threatened. As such, the Law on Prohibition of Mineral Exploration in Water Basins and Forest Areas was introduced in 2009 to protect, in part, the forests of Mongolia. The aim of the law was threefold, to:

• Revoke and modify licenses for exploration and/or mining of all mineral resources within an area of no less than 200 meters from a water or forest resource.
• Require the licence holders to be compensated.
• Empower local officials to determine the actual areas which can be mined and extend the 200 meter minimum limit as they see fit.

The implementation of this law triggered the revocation of hundreds of licences in late 2010, and yet with the discretionary rights awarded to local officials, we are still to see the significance of these provisions.

Vietnam

Under the Forest Protection and Development Law of 2004 (the Forest Protection and Development Law 2004), forests are classified into the following:

• Protection forests - with the main function to protect water sources and land, prevent erosion and desertification, prevent natural calamities and “control” climate.
• Special-use forests - with the main function for conservation of nature, specimens of the national forest ecosystems and forest biological gene sources, for scientific research, protection of historical and cultural relics as well as landscapes for recreation and tourism.
• Production forests - with the main function for production and trading of timber and non-timber forest products.
The Mineral Law 2010 prohibits mining activities in special-use forests and protection forests. To carry out mining activities in production forests, forest use rights must be obtained from the Ministry of Agriculture and Rural Development, either in the form of forest assignment or forest lease. The forest use rights are granted with prescribed rights and obligations, including payment of levies.

Western Australia

Under the Mining Act 1978, mining activities can be carried out in state forests and timber reserves. The approval from the Minister of Mines and Petroleum must be obtained in order to conduct mining activities in a state forest and timber reserve. Before granting his approval, the Minister will first consult with, and obtain the consent of, the Minister for Land Administration. An approval to conduct mining activities in a state forest or timber reserve may be given subject to prescribed terms and conditions.

The Conservation and Land Management Act 1984 (WA) (the Conservation and Land Management Act 1984) details what constitutes a state forest and a timber reserve. Under that Act, a state forest and a timber reserve comprise:

• All land that was a state forest or timber reserve under the Forests Act 1918, before the enactment of the Conservation and Land Management Act 1984.
• Any Crown land that is reserved by the Governor as a state forest or timber reserve.
• All land that is acquired and set apart, under the order from the Governor, to be a state forest or timber reserve.
• All land that is reserved as a state forest or timber reserve under any other Act.

The holder of a mining tenement must not allow detritus, dirt, sludge, refuse, garbage, mine water or pollutants from its mining tenement to obstruct any land used for forestry. Any violation will be considered an offence under the Act.