Experts ring alarm bell over heavy drain on iron ore reserve

Ores, minerals and raw materials have been exported in masses, especially to China. Meanwhile, Vietnamese enterprises have to import the materials to maintain domestic production.

Rushing to exploit ores to export for profits

Thoi bao Kinh te Saigon has quoted a source from the Vietnam Steel Association (VSA) as saying that “over the last two years, VTM, a mineral and metallurgy company, has been exploiting ores from Quy Sa iron mine in Lao Cai province to export to China, about 500,000 tons a year.”

VTM is a joint venture of the Vietnam Steel Corporation (VSC), the Lao Cai Mineral Company and Chinese Kun Ming Steel Group, which exploits and sifts ores at Quy Sa mine and builds the Lao Cai cast iron and steel mill.

The source from VSA said that the export of iron ores from Quy Sa mine to China has been allowed by the Ministry of Industry and Trade in exchange for fat coal.

Quy Sa mine is now being controlled by VSC. This is one of the biggest iron ore mines in Vietnam, with the estimated reserves of 120 million tons, just second to Thach Khe mine in Ha Tinh with the estimated reserves of 450 million tons. The Ministry of Industry and Trade grants export quotas every year.

“Over the last year, a lot of enterprises have asked for the permission to exploit and export ores. However, VSA has not agreed, except for very special cases, where exporters have to bear the highest export tax rate of 40 percent. The high tax rates aim to restrict the export of raw materials,” the VSA’s source said.

Also according to the source, the ore exploitation and export have been causing the waste of national resources and environment pollution, because most of enterprises have been exploiting ores in a spontaneous way: they only take good ores and give up lower quality ores.

In general, under the normal technical exploitation, both high and low quality will be exploited to sift medium quality ores for export.

VSA said that the capacity of making cast iron from iron ores of all the furnaces nationwide has reached 1.8 million tons a year. Since more and more blast furnace cast iron mills have been built, the demand for iron ores in Vietnam is forecast to increase sharply in the near future.

“If Vietnam continues allowing to export iron ores, domestic cast iron companies will lack ores because the iron ore reserves in Vietnam are limited,” wrote Nguyen Chi Cuong, Chair of VSA, in a document sent to the Prime Minister and relevant ministries, requesting to stop exporting iron ores.

Raw ores crossing border to China

A local newspaper reported that over the last two consecutive years, VSA has continuously sent documents to provincial authorities and relevant ministries, mentioning the exploration and defining of the iron ore reserves in the localities. It is necessary to clarify the iron ore reserves in Vietnam, while too many blast furnaces have been built and put into operation recently.

“It is the policy by the Government and the Ministry of Industry and Trade to encourage steel makers to invest in upstream works, i.e making cast iron from iron ores, making and laminating steel,” said Nguyen Tien Nghi, Deputy Chair of VSA.

A lot of enterprises think that they can collect iron ores in other localities and then carry to the localities where the blast furnaces are located. However, in fact, some furnaces do not have enough iron to operate, which has caused a big waste.

“In some localities, iron ores are not allowed to be brought out of the localities. Meanwhile, ores still can cross the border line to China,” Nghi said.

According to him, steel makers and ore exploiters cannot find a “common voice”, which has led to the massive export of ores to China. The former cannot pay high prices, while the latter only wants to export ores because they receive big attractive orders.

By the end of May 2011, Vietnam has exported 995,000 tons of ores and some minerals, worth 66 million dollars, an increase of 237,000 tons over the same period of the last year. – TBKTSG

Tags: Vietnam iron ore reserve