VietNamNet Bridge – Vinacomin, the investor of the two bauxite projects which have been certain of taking loss during the first 5-7 years of operation, has asked for the Prime Minister’s intervention, after its proposal to lower the environment fee was refused by the Ministry of Finance.

After successfully demanding for the coal export tariff reduction, the Vietnam Coal and Mineral Industries Group (Vinacomin) in 2013 asked for more tax incentives and preferential loans for the Lam Dong bauxite – aluminum and the Nhan Co alumin projects.

To date, Vinacomin has got the nod from competent agencies on the exemption and reduction of five types of tax. It has also got the government’s guarantee for the borrowing foreign capital for Lam Dong project. The government has also agreed in principle on the guaranteeing for borrowing capital for Nhan Co project.

However, all the tax incentives and preferences still cannot satisfy Vinacomin. In a recent dispatch to the Prime Minister, VInacomin asked for the 10-times reduction in the environment fee for bauxite exploitation activities.

Vinacomin has been backed by the Ministry of Industry and Trade (MOIT) which on November 27, 2013, sent a dispatch to the Ministry of Finance, requesting the environment fee reductions for Vinacomin.

The ministry believes that the environment fee for the bauxite projects should be at VND4,000 per ton instead of the currently applied VND30,000-50,000. The level equates to 10 percent of the production cost of one ton of raw bauxite.

The ministry emphasized that lower fee should be applied to bauxite projects, because the bauxite exploitation will not cause the high level of pollution as people think.

The bauxite exploitation sites would be recovered after 3-4 years of exploitation, while the soil, to be upgraded, would be given back to farmers.

The process of exploiting bauxite ore is believed to be similar to the earth exploitation for construction works or road leveling. Therefore, the environment fee of VND30,000-50,000 per ton stipulated in the Decree No. 74 would be unreasonable for bauxite projects.

The stipulated environment fee is 25-30 times higher than the fee for exploiting one ton of earth for construction works. It is nearly equal to the production cost for exploiting one ton of bauxite ores.

Meanwhile, the environment fee for coal exploitation is just equal to 1/10 of the production cost.

The most worrying problem that bauxite projects may cause to the environment is the treatment of the red mud. However, MOIT has affirmed that this would not be a high threat, because the investor has committed to make heavy investment on the red mud treatment.

In reply, the Ministry of Finance, on December 10, 2013, requested Vinacomin to obey the current regulations. This was for the second time that the ministry said “no” to Vinacomin’s request.

However, Vinacomin has not accepted the fate with resignation. It has lodged a complaint to the Prime Minister, asking the Prime Minister to instruct ministries to agree on the fee reductions.

It has warned that the bauxite projects, the two important national works, would take a loss in the first 5-7 years of operation, and that the high environment fee would make the finance burden heavier on the projects.

Pham Huyen