VietNamNet Bridge - A mining company has decided to give back to the state two iron ore mines with large reserves, an unprecedented move in the country. 


The decision to return the two mines under exploitation in Ha Giang province, according to analysts, shows that the golden age of the mining industry is over.

The industry began to face big difficulties in 2013. A lot of mining companies have temporarily closed mines and halted the exploitation. 

The ore smuggling activities, which were bustling in previous years, have decline as China no longer collects ore. Enterprises, which usually complain they cannot obtain export licenses in the past, now are quiet.

A mining company has decided to give back to the state two iron ore mines with large reserves, an unprecedented move in the country.

However, An Thong has become the first company which decided to give back two large mines, Tung Ba and Cao Vinh-Khuon Lang, which it has been exploiting for the last 5-6 years, to the state.

The reason behind the decision is that the exploitation cost is very high, while the iron content in the ore is low, at just 30-40 percent. 

Meanwhile, the iron ore price has dropped dramatically by 30-50 percent compared with early 2014. And no one can say for sure if the ore price will go up in the next years.

An Thong is a subsidiary of Hoa Phat Group, a very powerful conglomerate in Vietnam. However, it still cannot make profit with the mines and has reportedly incurred a gross loss of VND204 billion.

Finally, An Thong decided to import ore to process domestically instead of exploiting ores in Vietnam.

An Thong began exploiting Tung Ba mine in April 2011 and stopped the exploitation in July 2012. The exploited volume was estimated at just 9.6 percent of the volume it was licensed to exploit. 

As for Cao Vinh-Khuon Lang, only 2.7 percent of the allowed volume had been exploited until October 2014, when An Thong stopped the exploitation there.

Analysts commented that An Thong had to make such a decision because it had no other choice. Any miner will lose big money if they stop exploiting halfway.

Under the current laws, in order to obtain the right for exploitation, miners have to follow a lot of procedures, including the application for licensing and exploration for which they have to pay hundreds of billions of dong.

Enterprises have to pay two types of fees – the fee for exploitation right granting (pay annually during 5-8 years), and the fee for using geological information (pay at once before receiving license).

In the past, state management agencies many times threatened to take back mines allocated to miners if miners did not fulfill their commitments. But this is the first time it has had to return the mines.


TBKTSG