A mineral processing plant is the kind of project where an EPC contract fails in the most expensive way: the plant is built on schedule but never reaches the promised throughput and recovery, because the technological peculiarity sits in each mine’s ore, not in the drawings. An EPC contract for a minerals plant must therefore be written around a single centre — technology performance acceptance — rather than copied from an ordinary construction template.
The legal frame of a processing-plant EPC contract
EPC general contracts in construction are governed by the Construction Law 50/2014/QH14 as amended by Law 62/2020/QH15 and by Decree 37/2015/ND-CP on construction contracts. Alongside the construction frame, the technology and equipment supply part of an EPC package is commercial in nature, so penalty clauses must respect the maximum penalty of 8% of the breached obligation’s value under Article 301 of the Commercial Law 36/2005/QH11 where penalty sanctions apply. This overlap is where many EPC contracts go wrong: penalty clauses copied from international templates can exceed the Vietnamese-law cap and be void as to the excess.
When design capacity is not reached: the remedy ladder
The answer sits entirely in the performance acceptance clause: the contract must define design capacity by measurable indices — tonnes of ore per hour, metal recovery rate, concentrate grade, power and water consumption — plus a test-run protocol using the mine’s real ore over a sufficiently long period. When the contractor misses the indices, remedies climb a ladder: cure period, re-testing, price reduction matching the performance shortfall, and finally a right to refuse handover with damages. Without representative-ore test runs, the parties will argue forever whether the fault lies in the technology or in changed feed ore quality.
Technology warranty and performance security
Warranty in a processing-plant EPC has two distinct layers: construction warranty under the construction-quality regime of Decree 06/2021/ND-CP, and technology performance warranty by contract — the second layer is the one carrying the economic value. Owners should retain part of the contract price or require a bank guarantee until performance acceptance is achieved, instead of paying out fully against construction progress. The technology warranty should last long enough for the plant to run through at least one seasonal ore-grade cycle, because many technology defects surface only when feed grade changes.
Feed ore risk: the variable the contract must lock
Every processing plant is designed around a standard ore sample; when actually mined ore differs — harder, dirtier — performance drops without anyone being ‘at fault’ in the ordinary sense. A tight EPC contract defines the design ore envelope, the owner’s duty to supply representative ore samples for design and testing, and an index-adjustment mechanism when operating ore falls outside the design envelope. This clause allocates geological risk — a risk that cannot be eliminated in mining, only clearly allocated from the start.
Frequently Asked Questions
What matters most in an EPC contract for a processing plant?
Above all the performance acceptance clause with measurable indices for throughput, recovery and consumption, plus test runs on the mine’s real ore; penalty clauses respecting the 8% cap of Article 301 of the Commercial Law where penalties apply; and retention or bank security held until performance acceptance is achieved.
What if the contractor misses design capacity?
Remedies follow the contractual ladder: cure period and re-testing, price reduction matching the performance shortfall, and — if minimum thresholds still fail — the owner’s right to refuse handover and claim damages under the contract and construction law. Every step must rest on test-run data confirmed by both parties.
How long should the technology warranty run?
Construction warranty follows construction-quality law, while technology performance warranty is contractual — in practice it should run long enough for the plant to operate through seasonal ore-grade variation, typically tied to performance acceptance plus a stable operating period, backed by a bank guarantee for the warranty obligations.
This article has been quality-reviewed by the FLAW AI Legal Council