Vietnam: Potential to Be a Major Aluminum Producer

Rich in largely untapped natural resources and able to benefit from a low cost labor force, Vietnam has enjoyed 10-percent growth rates (although it has also suffered 11 percent inflation rates last year). The country has never been a major metals producer, but that could be about to change.

Blessed with abundant bauxite, estimated in a Reuters article at between 5.6 billion tons and 8.3 billion tons, Vietnam could become the third-largest alumina producer in the world after Guinea and Australia. Not satisfied with being just a raw materials producer, the country has awarded the engineering, procurement and construction contract for two alumina projects in the central highlands to Chalieco, a subsidiary of state-owned Chinese Aluminum Corporation of China (Chinalco). Both plants are expected to produce some 600,000 tons per year when operational, which initially will mostly go for export, but which the government hopes will form the basis for a domestic aluminum industry in the future.

The concerns are real, and will create a major hurdle to the exploitation of the Mekong’s hydroelectric potential. However, without cheap hydroelectric power, Vietnam is unlikely to move from being a low-value bauxite producer or medium-value alumina producer to a higher-value aluminum producer – or develop further downstream aluminum processing industrial activities. New thermal coal plants are set to generate the power for alumina production, but modern aluminum smelting only becomes realistic if it is based on hydro or gas-power production.