Vietnam allows mineral exports despite shortage at home

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Mining of apatite in the northern province of Lao Cai. Photo courtesy of Tuoi Tre

Many steel producers complain about the shortage of iron ore in the country even as the government continues to allow its export.

Tuoi Tre newspaper reported that in the first five months exports of more than 3.07 million tons of minerals like iron, titanium, apatite, manganese, and copper has been licensed.

Analysts said this is not only causing a drain on precious resources but also forcing processors to the verge of closing down due to a raw material shortage.

The Vietnam Steel Association sought in April a halt on export of raw materials.

Pham Chi Cuong, its chairman, said the export licenses only required exporters to clean the ores.

Vietnam does not have a large reserves of minerals, including iron, and the government needs to rethink its export policies, Cuong said.

Hoa Phat, a leading steel company, also called for a halt to export of raw minerals, and offered to buy iron ore at the export prices or even higher.

The export rush came after a cabinet green light in December on the grounds that it would help resolve the financial problems faced by a number of mining companies.

The ministry recently recommended to the PM that the exports should continue.

It said it would halt export of iron ore if Hoa Phat promises to buy all the iron ore stockpiled around the country.

The company has to scrupulously honor its commitment since some firms in the past had caused downward pressure on prices after ore exports were disallowed, it said.

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Following the PM's directive, the ministry asked cities and provinces in December to report on their mineral stocks to issue export licenses, and many businesses reported stockpiles exceeding the volumes they are permitted to mine.

They were rebuked but allowed to export.

Pham Chi Lan, an economist and former advisor to the PM, said allowing export of minerals could save some businesses but not the economy.

But there must be other ways to save the businesses and the government should not resort to selling minerals, Lan said.

Economist Le Dang Doanh said the government should at least set a limit if it allows export.

"When businesses have a large quantity of minerals, and their buyer is mostly China, they will face the risk of having to sell cheap," he said.

He also said that minerals are national assets and their management should be completely in the hands of the government, which would grant mining licenses through bids.

He said minerals have not been properly managed by local authorities. Some companies have doctored documents to make some large mines look small so that they could be managed at the local level and avoid the scrutiny of central agencies.

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