The Mineral Industry of Vietnam in 2000
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THE MINERAL INDUSTRY OF VIETNAM By John C. Wu According to the Vietnamese Government, the Geological and guidelines for the frameworks for managing mineral Survey of Vietnam had completed regional geologic mapping of resources and such activities as geologic survey, prospecting, the country’s land area at a scale of 1:200,000, and 41% of the exploration, development, production, and processing of land area with mineral potential had been geologically mapped at minerals in the mining sector (Nguyen and Nguyen, 1997). a scale of 1:50,000 (Tran and Le, 1991). On the basis of the The Government issued a new foreign investment decree in Government’s preliminary geologic surveys and detailed 1998 that disallowed 100% foreign ownership in oil and mineral exploration of 500 mineral occurrences and deposits, a wide exploration projects but eased licensing and export rules for variety of minerals were identified—antimony, bauxite, export-oriented companies (Far Eastern Economic Review, 1998). carbonate rocks, clays, chromite, coal, copper, natural gas, Since the new mining law became effective in 1996, the exclusive gemstones, gold, graphite, iron ore, lead, manganese, nickel, right of a successful exploration company to obtain mining crude petroleum, phosphate rock (apatite), pyrophyllite, rare licenses, the sole right of an exploration company to conduct earths, silica sand, tin, titanium, tungsten, zinc, and zirconium. exploration within its license’s area, and the ability of a foreign Except construction aggregates, coal, and petroleum, these mining company to export unprocessed minerals had been the mineral resources remained largely unexploited (Le, 1995). In major concerns of foreign investors (SEG Newsletter, 1998). 2000, Vietnam was the world’s fourth largest producer of The Government began implementing a new Enterprise Law in anthracite and the sixth largest producer of crude petroleum in 2000. This new law was to simplify the license application by the Asia and the Pacific region (National Mining Association, removing 145 sublicense procedures (Far Eastern Economic 2000, p. I-9; Oil & Gas Journal, 2000). None of Vietnam’s mineral Review, 2001). To attract foreign investment in Vietnam, the resources, however, was of world significance. Government reportedly was expected to lower the tax rates of The mining and quarrying sector, which played an important 5%, 7%, and 10% on foreign remittance to 3%, 5%, and 7%, role in Vietnam’s economic development, was an important respectively, effective July 1, 2001. According to the External sector of the Vietnamese economy. The output of the mining Finance Department under the Ministry of Finance, the and quarrying sector, which included the output of the oil and Government would also consider allowing foreign investors to gas industry, contributed about 7% to Vietnam’s gross domestic remit their profit abroad on a quarterly basis at a certain product (GDP), which was estimated to be $31 billion in 2000. proportion if the ministry’s new requirements were met (Saigon Exports of crude petroleum alone accounted for about 18% to Times Daily, 2000). the total export earnings, which were estimated to be $11.5 Because of the 1997 Asian financial crisis and the regional billion (International Monetary Fund, 2000, p. 3, 6, 28). economic downturn, overall foreign investment in Vietnam has Vietnam’s economy, as measured by real GDP, was estimated to decreased significantly since 1998. Total approved foreign have grown by 5.5% in 2000 compared with 4.25% in 1999 direct investment (FDI) pledges in 1999 dropped to $1.48 billion (International Monetary Fund, 2001, p. 6). from $4.06 billion in 1998. For the first 8 months of 2000, the total amount of approved FDI was less than $700 million (Far Eastern Government Policies and Programs Economic Review, 2001). As of 2000, Vietnam had bilateral investment agreements with 39 countries worldwide, which To attract foreign investment in the mining sector, the included Australia, China, India, Indonesia, the Republic of Government of Vietnam enacted the Law on Foreign Investment Korea, Laos, Malaysia, the Philippines, Singapore, Taiwan, and in 1987 and the Ordinance on Mineral Resources in 1989. In the Thailand in the Asia and the Pacific region. The United States- past 12 years, 42 production-sharing contracts to explore for oil Vietnam bilateral trade agreement, which includes provisions on and natural gas and numerous exploration licenses to explore for investment, was reached in July, but had not been approved by coal, copper, gold, nickel, manganese, rare earths, tin, titanium, the U.S. Congress at the end of 2000. tungsten, zinc, and zirconium in Vietnam had been granted by In 2000, minerals exploration activity remained slow owing the Government to foreign companies from Australia, Belgium, mainly to the lack of exploration capital and low metals prices in Canada, France, Indonesia, Japan, the Republic of Korea, the world market. Several foreign companies that explore for Malaysia, New Zealand, Norway, Singapore, Sweden, Thailand, gold and nonferrous metals had suspended their activities in the United Kingdom, the United States, and other countries. 1999; only two companies were still active in 2000. To provide a more competitive and favorable environment for foreign investment in its mining sector, Vietnam’s National Production Assembly passed a new mining law in March 1996 and enacted the new law in September 1996 to replace the 1989 Ordinance on In 2000, Vietnam’s mineral production included chromite, coal, Mineral Resources. To implement the new law, the Government fluorspar, natural gas, gold, kaolin, ilmenite, lead, phosphate issued the Decree No. 68 CP in November 1996 on regulations rock, pyrite, crude petroleum, pyrophyllite, salt, silica sand, THE MINERAL INDUSTRY OF VIETNAM—2000 27.1 stone, sulfur, tin, zinc, and zirconium. Production of processed of iron ore and pyrite) in Ba Vi District, Ha Tay Province; mineral products included cement, fertilizer materials (ammonia Mineral Development Co. No. 4 (producer of ilmenite and zircon) and urea), lime, crude steel, rolled steel, and refined tin (table 1). in Vinh City, Nghe An Province; Mineral Development Co. No. 5 Most mineral production was processed and consumed (producer of construction aggregates, fluorspar, and ilmenite) in domestically, although most chromite, ilmenite, crude petroleum, Tuy Hoa District, Phu Yen Province; Mineral Development Co. and zirconium production and some kaolin, coal (anthracite), No. 6 (producer of construction aggregates and ilmenite) in granite, salt, silica sand, and refined tin production were District 10, Ho Chi Minh City; and Geological & Mineral Mining exported. The major imported mineral products were refined Enterprise No. 304 (producer of iron ore and pyrite) in Duyen Hai petroleum products, primary aluminum, iron and steel, and Quarter, Lao Cai Provincial Town. fertilizer materials. Commodity Review Structure of the Mineral Industry Metals According to Chadwick (1998), about 1,000 mines and quarries were operating in 1998. Mining operations in Vietnam used Bauxite and Alumina.—In the past 5 years, laterite bauxite outdated technologies and unsophisticated equipment. Small- has been mined in small quantities for domestic consumption in scale mining of coal, chromite, gemstone, gold, and tin making chemical for water treatment. In 1999, VIMICO and commonly was by unorganized and unofficial companies. Aluminium Pechiney (AP) of France signed an agreement to According to the latest Government statistics, Vietnam has 930 conduct prefeasibility studies to develop a 1-million-metric-ton- quarries and mines under legal exploitation, of which 433 per-year (Mt/yr) alumina refinery in Lam Dong Province (Metal produced construction aggregates, 88 produced clays, 81 Bulletin, 1999). AP and the Construction and Investment produced cobble stone and sand, and 52 produced coal Development Consulting Co. signed an agreement in September (anthracite). The remaining 276 quarries and mines produced 2000 to conduct a feasibility study to build a bauxite-aluminum such ferrous minerals as iron ore and pyrite; such nonferrous complex at Tan Rai in Lam Dong Province. According to minerals as bauxite, chromite, copper, gold, lead, rare earths, tin, VIMICO, which was the project developer, the feasibility study and zinc; and such industrial minerals as barite, fluorspar, would cost about $2.8 million, of which AP would receive about ilmenite, phosphate, silica, and zircon. Because the mining $2 million for consulting. Under the agreement, AP was to study industry was still in its early stage of development, the annual the technology for aluminum production and an affiliate of the production totals for all but construction aggregates and coal Ministry of Industry was to conduct research on bauxite mining was small. The mining industry’s workforce accounted for and to undertake auxiliary works. The feasibility study was about 0.6% of the country’s labor force (Embassy of Vietnam in expected to be completed in 2001. The total development cost of the United States, December 9, 2000, News—Mining industry the complex was estimated to be $800 million (Vietnam Economic and national economic development in new century, accessed Times, September 9, 2000, France, VN join in bauxite-alum April 26, 2001, at URL http://www.vietnamembassy-usa.org/ complex, accessed July 10, 2001, at URL http://www. news). vneconomy. com.vn/ne/ext_economic/bilateral/00-7002.htm). The mineral industry comprised