VIETNAM has passed its first mining law to protect the rights of foreign prospectors and clarify state control of mineral reserves. The legislation could unleash a flood of foreign investment as at least 16 Australian companies are known to be waiting for a secure legal framework before proceeding with deals to exploit coal, gold, gemstone and ore deposits. One foreign lawyer said yesterday: 'We expect it [the law] will give foreign firms the access and protection they want, while Vietnam is making sure it won't be taken for a fool. 'It may set a new standard for anything here with foreign involvement. It seems to be a tough, smart little bit of legislation.' The law was passed late on Friday during the National Assembly and has yet to be published, but sources close to the closed-door sessions said few changes had been made to the bill, which was drafted 14 times. The bill made provision for mining contracts that can be extended for up to 50 years and defends prospectors' rights to exploit finds, they said. The legislation also contained strict environmental and social clauses. The law stated that local communities had to be among the 'direct beneficiaries' from profits - aside from taxes. Local people had to be given priority in any spin-off jobs, the sources said. Approved miners had to improve local infrastructure and repair environmental damage, a rule which would be enforced by a demand for a bank guarantee, they said. The new law would complement foreign investment laws which enabled Vietnamese partners - mostly state firms - to take stakes in a joint ventures in order to provide access to land. All land in Vietnam is state-owned. Mining companies were waiting to study the published version before reaching conclusions. One said: 'Obviously there are going to be many demands and responsibilities on us. 'The tax scale looks complicated enough before we start taking any of the side payments and bank guarantees into consideration.' Foreign investors have said they were wary of moving into the sector without the protection of the law, given Vietnam's intense sovereignty over its territorial resources. One sand-mining joint venture was closed for six months because of a dispute over exclusive marketing rights. It is now back in production. At present investment remains minimal and the mining industry is ill-developed. Dozens of mines are operated by state firms with ancient equipment and illegal operations are manned by armies of bonded, rag-tag workers. Many deposits are located in Vietnam's poorest and most isolated provinces. Local governments are directly involved with some of the illegal undertakings. Hanoi's Communist Party rulers are keen to spread growth from the booming cities to the countryside, where 80 per cent of Vietnam's 74 million people live.