Alumina prices to decide bauxite project's efficiency

As requested by the Prime Minister of Vietnam, the two bauxite plants Tan Rai and Nhan Co will have their capacities unchanged during the trial period from now to 2015, said Nguyen Manh Quan, director of the Heavy Industry Department under the trade ministry.

By 2020, their capacities would be doubled if traffic infrastructure conditions were sufficient, he said, referring to the Government’s instruction.

Later, if the two plants put in good performances, other alumina projects with a capacity of 2-3 million tons per year would be developed, Quan said at a press conference on industry and trade in the first two months on Monday.

The plan for development of the bauxite industry will be submitted to the Politburo in the coming time for guidance and then forwarded to the Prime Minister for approval.

The Tan Rai bauxite project with an annual capacity of 650,000 tons is scheduled to start operations this June.

Quan said the total investment cost of the project had risen 30%. Alumina price was around US$326 per ton in December 2012, versus some US$365 in September 2009 when the project was approved.

He ascribed the price drop to the economic crisis, making not only aluminum production but also production of other metals significantly slow down.

“Given the current mechanism and the alumina price in late 2012, this project is not cost-effective and has a high risk,” he stated.

Some policies regarding the Tan Rai bauxite project should be adjusted. For example, the project owner Vinacomin has suggested compensation for land acquisition for bauxite exploitation should be reduced to VND250 million per hectare from VND800 million.

In addition, Vinacomin wants the environmental protection fee to be lowered from billion.VND30,000 to VND5,000 per ton, saying that it has already spent much on environmental protection.

“With adjustments in mechanism and price on the uptrend, the Tan Rai bauxite plant is forecast to be efficient,” said Quan.

Earlier, Vinacomin has signed a contract with a local firm to sell alumina at the mine at US$340 per ton, a little higher than the price in late 2012.

Quan said international organizations had predicted alumina price would go up in line with aluminum price. From now to 2020, alumina price is expected to rise to US$450 per ton, and thus the Tan Rai project might achieve higher economic efficiency.