“State Audit: Some of the Mining and Mineral Group’s Investments ‘Conceal Risks'”

No Dividends Distributed Yet

The State Audit Office of Vietnam has just published its audit findings on the financial statements and related activities of the Vietnam National Coal-Mineral Industries Group (Vinacomin or TKV) regarding the management and utilization of state capital and assets in 2023.

In terms of financial and accounting management, the audit revealed issues such as difficult-to-collect receivables that required provisioning as of December 31, 2023, and instances of incomplete debt reconciliation for receivables and payables.

Additionally, there were instances of fixed assets being put into use without timely finalization of their values, accounting, and inventory tracking in the accounting books.

Concerning production and business costs and pricing, TKV has not yet issued comprehensive economic and technical norms. They have also not established and issued rates of loss for coal transportation by type of vehicle and actual moisture content applied…

Regarding payments to the state budget, some units have not declared value-added tax (VAT) on gifts; under-declared personal income tax; underpaid environmental protection fees; and failed to exclude certain expenses when calculating corporate income tax…

Notably, in terms of long-term financial investments, TKV’s parent company has made some inefficient and financially risky investments. Examples include investments in the Cromit Co Dinh Thanh Hoa Joint Stock Company, the Cambodia-Vietnam Alumina Joint Venture Company, Vinacomin Laos Co., Ltd., and the Thach Khe Iron Joint Stock Company…

The TKV Mineral Corporation, a subsidiary of TKV, has not distributed dividends for 2023 as post-distribution profits were insufficient for dividend payments, or there were accumulated losses despite making a profit.

In the area of mineral resource exploitation, there were cases where the actual extracted reserves differed from the designed reserves in the construction drawings, or procedures for adjusting mineral exploitation permits and paying for the upgraded resources were not completed…

The Nhan Co Mine Project Has Not Yet Sought Expert Opinions

The State Audit Office of Vietnam also pointed out several issues regarding compliance with laws, policies, and regulations in the management of capital construction investment for the ten audited construction projects.

In terms of investment project formulation, appraisal, and approval, some content inconsistencies were found between the feasibility study report and the approved investment decision for the Nhan Co Mine Project. Additionally, this project has not sought expert opinions on the basic design from specialized agencies.

Regarding design and cost estimate appraisal and approval, the audit findings revealed that Project No. 04 lacked supplementary geological survey drilling data to determine the geological sections of the rock excavation area.

Moreover, some packages had inappropriate cost estimates due to outdated bid package prices within 28 days before the bid opening (Ha Long Coal Company), and discrepancies between quantities and the design drawings, with incorrect norm codes according to the explanatory report of the construction design and drawing (Cua Ong Coal Preparation Company).

In terms of contractor selection and contract signing, there were instances of delays in initiating the contractor selection process compared to the approved timeline in the approved contractor selection plan. The bidding documents for the Nhan Co Mine Project included specific requirements without clear explanations or justifications.

Concerning progress management, the audited projects experienced delays compared to their initial plans, leading to necessary adjustments in their implementation timelines…