Ban Phuc Nickel Mines Limited. Photo credit: Saigon Times Online
Vietnam's only facility for mining and processing nickel has incurred losses of around US$55 million since it started operating in 2013, according to the Ministry of Finance, which plans to keep the royalty on the mineral unchanged.
The ministry has recently drafted a decree proposing new royalty rates for minerals, news website Saigon Times Online reported on Wednesday.
In the proposal, which will be submitted to the government soon, the rate for nickel has been left at 10 percent.
The ministry said a higher rate would affect the "survival" of the mine, according to Saigon Times Online. Under the law, the ministry can increase the royalty to up to 25 percent.
This comes after the ministry rejected a request from the nickel mine's investors to reduce the export tax rate on nickel, on the ground that the government did not encourage mineral exports.
Officially known as Ban Phuc Nickel Mines Limited, the $136-million facility in the northern province of Son La was designed to have an annual output of 360,000 tons of nickel ores and 70,000 tons of refined nickel, mainly for exports.
Asian Mineral Resources Limited, which is listed on Toronto Stock Exchange, has a 90 percent stake, and Vietnamese-owned Son La Mechanics and Techniques Joint-stock Company owns the rest.
In June last year, the investors claimed that they suffered huge losses, citing low prices and high costs, and that royalty and tax payments were equivalent to 32 percent of their revenues.
When work started on the project in 2008, nickel was sold for $28,890 per ton, but by then, the price fell to $13,216 per ton.
However, the ministry said a nickel mine could operate effectively and profitably only with at least 18 million tons in reserves, while a 2012 report by the National Assembly showed that Vietnam's reserve was just around 4.5 million tons, mainly in Son La.
Not to mention that the Ban Phuc facility was located in an area with social and economic disadvantages, it said.
Last year Vietnam exported around 74,800 tons of refined nickel, worth some $87.3 million.
Meanwhile, local demand for nickel was too small, around 5,300 tons by 2020 and 6,700 tons by 2025, the website reported.