The most familiar structure in Vietnamese mining pairs one side holding the licence and local relationships with another holding capital and technology. A joint venture stitches those halves together — but it is also mining’s most fragile structure, because the venture’s central asset is an administrative right that cannot be divided or seized like ordinary property. Mining JV design must therefore start from the licence, not from share percentages.
Can a mining licence be contributed as capital
An exploitation licence is an administrative instrument confirming the extraction right of the exact licensed entity; it is not an asset the company owns in the ordinary sense, freely contributable like cash or machinery. Putting the mining right into a venture in substance changes the entity exercising that right, so it is feasible only with the licensing authority’s approval under the transfer or licensing mechanisms of the Law on Geology and Minerals 54/2024/QH15. The safer market structure is for the licence-holding partner to contribute cash and other assets, while the licence is newly issued to the venture entity or remains with the holder under a clear operating agreement — rather than booking the licence as a capital line.
Valuing a mining right in a venture
Where a deal does price the mining right — in a transfer, an approved contribution or a share sale — value must be set by independent valuation following the Enterprise Law 59/2020 principles for contributed assets, based on remaining licensed reserves, the approved grant fee and projected project cash flow. Inflated valuations used to capture control are a classic dispute source: when actual reserves disappoint, the cash partner demands revaluation and compensation. The venture agreement should carry an adjustment mechanism for share ratios or price if additional exploration fundamentally changes reserves.
When a partner fails to contribute in full
Where a partner misses its capital schedule, the Enterprise Law default is that unpaid capital carries no corresponding voting weight and the defaulting party compensates the company’s damage; the charter and shareholders’ agreement can — and should — go further: dilution, a buy-out right over the defaulter’s stake at a discount, and venture termination rights. For a mining project, the single most important clause is who carries the licence-attached financial duties — grant fees and rehabilitation deposits do not wait for a capital dispute to resolve, and the State deals only with the licensed entity.
Designing control in a mining venture
Share ratios do not automatically create real control over a mine’s life-or-death decisions: changing the mining design, mortgaging the mining right for loans, transferring the project, closing the mine. The venture agreement should list reserved matters requiring supermajority approval, a deadlock mechanism for 50–50 disagreements, and exit terms — put options, drag-along rights and exit valuation. Skipping this design layer, mining ventures rarely die in year one; they die at the second capital call, when grant fees and expansion investment fall due together.
Frequently Asked Questions
Can a mining licence be contributed to a joint venture?
Not as an ordinary asset, because the licence is an administrative right attached to the exact licensed entity. Bringing the mining right into a venture needs the licensing authority’s approval under the Law on Geology and Minerals 54/2024/QH15; the safer practice keeps the licence with one clear entity and designs operating rights and benefit sharing through the venture and operating agreements.
How is a mining right valued for a venture?
Value is set by independent valuation under the contributed-asset principles of the Enterprise Law 59/2020, based on remaining licensed reserves, the approved grant fee and projected project cash flow. The agreement should include an adjustment mechanism if supplementary exploration fundamentally changes reserves against the original file.
What happens if a partner does not contribute enough capital?
Under the Enterprise Law, unpaid capital carries no corresponding rights and the defaulting partner must compensate the company’s damage. The charter and shareholders’ agreement should add dilution, buy-out and termination rights; and the licence-attached grant-fee and deposit duties must have a clearly named bearer toward the State.
This article has been quality-reviewed by the FLAW AI Legal Council