Vietnam starts work on 1st bauxite/alumina plant
HANOI - Vietnam started building its first bauxite/alumina complex on Friday, but it needs to borrow half the $490 million needed from foreign banks, project officials said.
The lack of money, along with domestic power shortages, made Vietnam decide not to produce alumina at the plant, at Tan Rai in Lam Dong province, 300 km (190 miles) northeast of Ho Chi Minh City.
"The ground breaking ceremony is today and production of 600,000 tonnes of alumina per year is scheduled from the fourth quarter of 2009," said Ngo Van Troi, director of state-run Vietnam National Mineral Corporation, developer of the complex.
World demand for base metals is strong, and aluminium prices sit close to a 17-1/2-year high of $2,670 a tonne reached in early February.
Bauxite is the raw material used for making alumina, a white powder for producing aluminium. Vietnam estimates its raw bauxite ore reserves at up to 8 billion tonnes, the world's third-largest after Guinea and Australia, and mostly unmined.
Even though Vietnam would not be producing alumina until 2009, neighbouring China, the world's top importer of alumina would be among several potential buyers, officials said.
Last December Aluminium Corp. of China Ltd (Chalco) , the world's second-largest alumina producer, said it would join bauxite mining and produce alumina in Vietnam's Dak Nong province, next door to Lam Dong.
Officials said the Vietnam Coal and Minerals Group had been working with China's Chalco in Dak Nong. The group plans to produce a combined 1.6 million tonnes of alumina by 2010 from Tan Rai and Dak Nong.
Vietnamese officials have said the project with China would cost more than $1.3 billion as it would include the cost of building a railway to transport alumina to a seaport.
Officials said Vietnam has yet to include aluminium production in the Lam Dong project, because it requires an extra investment in a power plant.
"Vietnam is still facing electricity shortages and the project has yet to include a separate power plant," Troi said.
Troi said the complex was designed to use 1.7 million tonnes to 1.8 million tonnes of purified bauxite ore annually.
Hoang Van Thao, head of the project's development board, said Vietnam would borrow around $250 million from foreign banks to fund the construction. He declined to name any banks involved.
Last month officials said loans of up to $350 million could come from banks in Belgium, France, Germany and Japan.
"That was our plan earlier, but now we have finalised that more funds would be coming from the state and the parent firm, so the loans will be less," Thao said by telephone from Lam Dong.
The Tan Rai project developer is a member of the Vietnam Coal and Minerals Group, the first conglomerate-type business group in communist-ruled Vietnam.
Reuters - April 7, 2006.
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