Expectations on two bauxite projects

According to the Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin), in the first quarter of this year, the Tan Rai Alumina Plant produced and sold 129,000 tonnes of alumina, achieving the quarterly plan. The plant strives to produce about 135,000 tonnes of alumina in the second quarter of this year and sell about 540,000 tonnes of alumina in the whole year. The Tan Rai Alumina Plant’s products have a high quality, helping create favorable conditions for consumption.

According to Vinacomin’s assessment, alumina prices remained an important factor deciding the two projects’ efficiency. According to Citigroup Inc., Morgan Stanley and Societe General SA’s forecasts, alumina prices on the world market in the 2010-2020 period reached an estimated US$300-640 per tonne.

In the testing period, the Tan Rai Alumina Plant’s products were sold at about US$300 per tonne. In 2014, alumina prices had been negotiated to increase by 18 percent, reaching US$330 per tonne. The plant will reach design capacity of 650,000 tonnes per year from 2015 and will make profits from 2018.

Together with the Tan Rai Alumina Plant, the Nhan Co Aluminum Plant project had completed 70 percent of workload based on Vinacomin’s latest report. The plant is expected to be put into operation in the end of 2014.

The Nhan Co Aluminum Plant project consists of two main plants, including the bauxite ore refinery plant with a capacity of 1.65 million tonnes of ore per year and alumina production plant with a capacity of 650,000 tonnes per year. The refinery plant and the production plant are able to expand a capacity to 3.3 million tonnes and 1.2 million tonnes per year, respectively.

According to Deputy Minister of Industry and Trade Do Thang Hai, the Ministry of Industry and Trade determined in advance the loss possibility in the first period of the two projects. In terms of the Tan Rai Alumina Plant and the Nhan Co Alumina Plant projects, they would suffer losses in the first five and seven years, respectively. “Losses were calculated based on selling prices of the project. In fact, market prices are higher than estimated prices, leading to the faster payback. The Ministry of Industry and Trade strives to soon implement the equitization process,” Deputy Minister of Industry and Trade Do Thang Hai said. In addition, the two projects also have an exploiting time of 30 years. However, together with large reserves, the two projects could be exploited by at least 50 years.

To help cut losses, market factor plays an important role. In 2013, 160,340 tonnes of alumina were exported to Switzerland, Hong Kong, China, the Republic of Korea and Singapore. In addition, 844 tonnes of alumina and 3,840 tonnes of aluminum hydroxide were sold in the country. Vinacomin also signed long-term contracts to sell 250,000 tonnes of alumina per year to the Japan’s Marubeni Corporation and 150,000 tonnes of alumina per year to the China’s Yunnan Aluminum Co., Ltd. and signed other annual contracts with foreign partners.  

Minister of Industry and Trade Vu Huy Hoang affirmed that domestic aluminum demands will reach about 0.75-1 million tonnes by 2020 and 1.6-2 million tonnes by 2030. Vietnam currently imports 100 percent of aluminum. Therefore, the implementation of bauxite projects is needed. In addition, deploying bauxite projects also helps ensure the locality’s socioeconomic development and better living conditions for people.

Source: VEN