Committee deems bauxite mines risky, ineffective

By Anh Vu, Thanh Nien News

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Bauxite excavation in Vietnam's Central Highland Province of Lam Dong. PHOTO: LAM VIEN
Vietnam’s increasingly expensive bauxite refineries will carry low benefits and high risks, officials said during a legislative session last Saturday.

A report presented by Nguyen Van Giau, chairman of the Economics Committee of the legislature, known as National Assembly in Vietnam, said that aside from their tax contributions, the Nhan Co and Tan Rai projects in the Central Highlands have brought few benefits.
The projects were backed by the Vietnam National Coal and Minerals Group.
Tan Rai opened last October in Lam Dong Province while construction at Nhan Co in Dak Nong Province is slated to finish this June.
 
There have been concerns about the quality of the equipment, the technical capacity of the investors and contractors, and their ability to deal with possible breakdowns.
Investment in the projects has significantly overshot the initial budget, the report said.
A February report by the Ministry of Industry and Trade said the project costs had swelled by 30 percent, to VND15 trillion and VND16 trillion.
Tan Rai is expected to yield losses of VND176-258 billion a year until 2015 and Nhan Co until 2020.
Giau cited international data and expert opinions in asserting that the success of a bauxite project would be decided by seven factors – a rich natural supply of bauxite, convenient site access (to ensure low transportation costs), an environmentally secure site, modern mining technology, rich and cheap supplies of water and power, and a high financial and management capacity.
He said the projects in Vietnam only boast the first factor.
Material transport and delivery costs for the final alumni products account for 10.8 percent of the product price at Tan Rai and more at Nhan Co, which lies farther from the port.
Deputies at the meeting urged the government to consider stopping the projects, given their current condition.
But Deputy Prime Minister Hoang Trung Hai, who is in charge of supervising the projects, said Vietnam can fix these inconveniences by seeking lower prices from the state-owned Electricity of Vietnam--a monopoly electricity provider.
He also said the country should consider building a rail system (which would cost US$2.5-3 billion) to facilitate transportation for the industry and help Vietnam become a major aluminum producer by cranking out some 11 billion tons of bauxite nationwide.
Giau noted that the projects also employ 287 foreign workers, many of whom are Chinese.

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