Vietnam loses $168 mln to illegal iron ore exports: industry

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  An iron ore mine in the northern province of Ha Giang
PHOTO COURTESY OF TUOI TRE

The Vietnam Steel Association said that the country lost over VND3.56 trillion (US$167.98 million) to illegal export of iron ore to China in the last two years, but the government has said it cannot confirm the claim.

"There is no basis to identify if the information is correct," the Ministry of Industry and Trade said in a reply to Deputy Prime Minister Hoang Trung Hai, Tuoi Tre newspaper reported Tuesday.

Hai had ordered the ministry to clarify the findings the association sent to him.

According to the ministry, the VSA calculated the figures based on the discrepancies between iron ore trading figures reported by Vietnamese and Chinese customs in 2011 and 2012.

But the ministry quoted Vietnamese customs authorities as saying at a recent meeting that it is impossible to verify the accuracy of the Chinese figures because the two agencies do not exchange information.

The VSA told Hai that the Chinese customs had reported imports of 2.8 million tons of ore from Vietnam at $106 a ton in 2011, but the Vietnamese side had only reported 1.3 million tons at $52.

Last year the figures had been 1.74 million tons and 23,600 tons at $92 and $46.

If there was indeed the discrepancy, Vietnam lost VND1.78 trillion ($84 million) in taxes and fees in each of the two years, the VSA said.

Illegal exports are rife in northern provinces like Phu Tho, Hai Duong, Hai Phong, and Quang Ninh, where huge iron mines are located, it said.

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Government agencies need to tighten management to stop the drain of minerals and fix minimum prices for iron ore exports to compute taxes, it said. 

Speaking to Tuoi Tre newspaper, VSA chairman Pham Chi Cuong said the study was done "seriously" and he stood by it.

The ministry told the deputy PM that while illegal exports could well account for the discrepancies, they could also be attributed to how the countries define iron ore.

Chinese agencies identify waste from mining and steel production also as iron ore, it said.

As for the prices, while Vietnamese businesses probably declared lower prices to evade taxes, Chinese businesses could have reported higher prices to evade income tax, it said.

China encourages and helps its businesses to import minerals.

It suggested that the Ministry of Finance should immediately review export procedures and tighten them.

In January last year the government banned iron-ore exports, but in December lifted the ban following pressure from local governments who said businesses had large inventories, which the ministry estimated at around 1.5 million tons.

The ministry issued a circular permitting exports on condition the ore is processed and comes from approved mines.

Vietnam has iron ore reserves of 960.6 million tons, almost 80 percent of them known, while 3.5 million tons have been mined annually in recent years.

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