National Coal-Mineral Industries Group Vinacomin has received an import duty exemption from the Ministry of Finance on its machine spare parts for Tan Rai, Vietnam's first bauxite plant that began official operations in September.
Normally the government will consider a tax break for shipments of items which the country does not make.
But the ministry said the spare parts "could be" classified in this category as the locally-made items carry little guarantee on quality, Vinacomin said in a statement on its website.
The exemption was backed by the Ministry of Planning and Investment and the Ministry of Industry and Trade, who said the state group would otherwise pay more than VND100 billion (US$4.74 million) in tax.
Besides the import tariff break for spare parts for the $700-million plant in Lam Dong Province, Vinacomin has obtained several other incentives there and at Nhan Co, another plant in Dak Nong Province, whose construction is set to be completed in mid-2014.
However, Vinacomin is under pressure to halt construction and operation of Vietnam's first two bauxite processing plants due to concerns over economic effectiveness.
In May it said the projects would be effective as the government had promised no export duties on its refined bauxite. But economists then disagreed and said a project that could only be profitable thanks to tax breaks was ineffective.
Vinacomin planned to use 30 percent of VND5 trillion ($236.8 million) it had recently raised in bonds to invest in the bauxite plants.
An October 23 report on its website said Tan Rai had produced 110,000 tons of alumina, which will be smelted to make aluminum, since it went on stream with a full capacity of 650,000 tons per year.
Of this, Vinacomin sold 80,000 tons to four domestic companies and two buyers from Switzerland and South Korea. It is negotiating to sell alumina to four other buyers from China, Iran, Japan, and Singapore.
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