The Standing Committee of the National Assembly of Vietnam has for a second time returned a proposal to increase royalty rates on gold to the Ministry of Finance for further consideration citing concerns relating to foreign investment and Trans-Pacific Partnership Agreement negotiations.
The proposal, presented by the Ministry of Finance, sought to increase royalty rates on gold to 17% and included proposed increases for numerous other minerals.
Besra Gold’s CEO John Seton says, “The decision sends a welcome signal that Vietnam is mindful of foreign investors. The company will continue to work with the government to show how it can increase Government revenue by increasing production. Reduced royalties will encourage new capital investment that will result in higher production and longer-life mines leading to sustainable increases in royalty revenue.”
He said that by his calculations, if the royalty was reduced to 9%, planned new capital expenditure would result in more than 20% production increases at the company’s Phuoc Son project, which would far exceed the revenue increase sought by a royalty increase. A more attractive royalty regime would also potentially attract new investment by other international companies.
Besra is a diversified gold company focused on four advanced properties - the Bau Goldfield in East Malaysia, Bong Mieu and Phuoc Son in Central Vietnam, and Capcapo in the Philippines. Besra expects to expand existing gold production capacity in Vietnam over the next two years and is projecting new production capacity from Bau Central during late 2015.