At a regular press conference hosted by the Ministry of Industry and Trade on April 7, Deputy Minister Do Thang Hai affirmed that the bauxite mining project in the Central Highlands, notwithstanding losses, will recover investment capital soon and be effectively operating after 12-13 years.
Tan Rai and Nhan Co bauxite projects have been hot topics of debates of the press in recent years, as they are suffering huge losses but still ask for more preferences in taxes and fees. Earlier, the Ministry of Trade and Industry and the Vietnam National Coal, Mineral Industries Holding Corporation Limited (Vinacomin) sent an explanatory report on the effectiveness of these two bauxite projects to the National Assembly Standing Committee. Accordingly, after the test-run time, Tan Rai plant was estimated to incur a loss of VND258 billion in the first year and an accumulative loss of VND460 billion by 2015 before becoming profitable from 2016. Nhan Co project was forecast to suffer a loss of nearly VND3,000 billion in its first six years (from 2015 to 2020).
In this regard, Deputy Minister Do Thang Hai said: "Tan Rai project will suffer from loss in the first five years and be recovering the investment capital after 12 years. Both projects are designed to exploit bauxite in 30 years but their operational lifespan may reach 50 years. Besides, bauxite is not toxic as thought."
He added that the ministry did not ask for incentives but proposed some policies to fit the current situation.
Taking price factor and alumina export volume into account, these two projects are highly feasible. Moreover, even in the trial-run time in 2013, Tan Rai project exported over 160,000 tonnes to foreign companies. In 2014, Vinacomin signed long-term alumina sales contracts with Marubeni Corporation (Japan), Yunnan Aluminium Company (China) and other partners.
Bui Quang Chuyen, Deputy Director of the Department of Heavy Industries, the Ministry of Industry and Trade, added that tax and gas proposals for the two bauxite projects are on the right track.
He analysed that, according to VAT regulations, mineral resources processed into other forms of products are imposed a 5 percent tax while unprocessed ones are subjected to zero tax. So, zero tax on unprocessed bauxite is perfectly lawful.
He pointed out that environmental costs currently applied to bauxite projects are absolutely irrational when they are 20 - 30 times higher than soil and rock exploitation. Regarding requests for changes in land compensation and site clearance in bauxite mining sites, Mr Chuyen said Nhan Co bauxite site covers 150 -160 ha and the land restoration is quite fast, only 3-5 years.
According to the Ministry of Industry and Trade, the project life cycle is 50 years while the soil needs only 3-5 years to restore and the people can use it again. For that reason, the ministry proposed not paying land compensation but only compensations for crops and assets on the land and renting the land from the people. After five years, they can plant crops on this land and enjoy lower tax rates than now.
Huong Giang
Vietnamese
