"Patience, persistence and
perseverance were the three key qualities one US foreign
investor advised for companies looking to invest in
The South East Asia country is
emerging as an attractive exploration target; an abundance of
bauxite, coal, and iron ore, in addition to significant
deposits of strategic industrial minerals such as rare earths,
is providing the stimulus needed for long-term investment in
This is a government-backed charge
towards resource development. Compared to other countries in
the region, such as China, Malaysia and Thailand,
Vietnams industries are still by and large waiting to be
established - and it is accepted that raw materials are an
integral part of the investment cycle that is needed to ensure
the country continues to grow.
Illegal sand dredging on the Mekong River Delta: the
Vietnamese government is clamping down on illegal
operations which threaten its mineral development plans
Perhaps because of this, the central government is also highly
protective of Vietnams natural resources and is
determined that value creation occurs domestically. This means
that foreign investors are scrutinised and business plans are
advised to detail not what Vietnam can offer you, but what you
can offer Vietnam.
Any company wanting to start
a business in Vietnam must be willing to build a relationship
with the government and its domestic partners, one
investor told IM.
[Companies should] develop a
plan for investment that meets with the governments
development plans; not necessarily only based on their own
corporate plans, he added.
Generally mining activities in Vietnam are regulated by master
plans, which are put together by the central government. The
plans attempt to forecast which minerals will be in demand, and
where they can be sourced, according to the industries the
country wants to develop.
These plans are a combination
of inputs from the ministries of construction, industry,
natural resources and so on, Antonio Sequeros, Tractus
Asias Vietnam consulting manager, said in an interview
with IM. The ministries sit down
together and decide what industries they are going to need to
develop and what resources will be used.
Complications for investors arise
when master plans are disseminated at the provincial government
level. Local governments may have specific, and conflicting,
interests; while one province may want to develop mining,
another may be targeting tourism.
Ultimately local governments
must comply with the central governments master plan. So
in theory local governments can make decisions, in practice
they cannot, Sequeros said.
This sometimes results in land use
conflicts, where a local government attempts to reclaim the
land that is held under mining licences.
Legally those mining
companies have rights, but local governments are trying to
reclaim the land, Sequeros explained. In these
cases, the ultimate decision is made by the central government;
so the higher an investors political connections go, the
Tractus Asia is one of the
companies aiding project development in the region, by helping
foreign investors to set up businesses in Asia.
The company is presently involved
in two industrial mineral projects - bentonite and silica
sand - with undisclosed partners. Much of Tractus
work has focused on understanding market dynamics in Vietnam
and supply-demand chain for certain sectors.
Both projects are in the early
stages of development, but the silica sand project in
particular is promising for providing the value creation that
Vietnams government seeks. It is understood that float
glass and photovoltaic cell markets could be supplied with
material from the companys partner.
Table 1: Vietnams mineral production (2008)
|Clays (including kaolin)
|Sand and gravel
*including metallurgical grades
The central governments desire to aid the start-up of
projects that significantly benefit Vietnam means that certain
projects will take precedence over others - namely mineral
projects that potentially bring the most downstream profit.
One such mineral is chromite which,
due to Vietnamese government regulations, cannot be exported as
Archipelago Resources Plc (ARP) is
presently developing an alluvial chromite project, located in
Thanh Hoa province to the south of Hanoi, which will produce
3m. tpa (110,00 tpa concentrate) initially for ferrochrome
Two ferrochrome are plants under
construction on the margins of ARPs deposit, with
targeted capacities of 20,000 tpa and 70,000 tpa.
We are working in cooperation
with the state mining company, Vinacomin, country manager
Steven Dudka told IM. ARP first became
interested in Vietnam in 2004 and representatives came at that
time to research exploration and mining
Vinacomin holds a mining license
over an area of 16.6km2, and an additional area of
over 23km2 that also contains chromite. The overall
deposit is reported to contain about 21m. tonnes chromite at a
grade of about 3% Cr2O3.
We have been requested by the
government to complete licensing procedures and commence mining
as soon as possible. With this government support to expedite
licensing, our production may come on stream in late 2011 or
early 2012, Dudka added.
At this time all production is
scheduled for metallurgical use, but the company said other
grades may be assessed once the project is running.
Vietnam mineral highlights
The initial challenge for any company looking to develop a
Vietnam-based mineral project is information; the results of
exploration work in the country are not publicly available.
The potential of industrial
minerals is very large in Vietnam, but the amount of
exploitation is still low, Dr Tran Kim Phuong, Vietnam
Institute of Geosciences and Mineral Resources, told
Despite the information shortage,
several industrial mineral deposits have been documented as key
development targets for the country.
As Dr Tran explained, projects that
are considered to be the most promising in Vietnam at present
white limestone in Quy Hop district, Nghe An province and
in Ba Be and Cho Don districts, Bac Can province;
rare earth ore in Phong Tho district, Lai Chau province;
feldspar in MDrac and Ea So areas belonging to
MDrac and Ea Kar districts of Dak Lak province
(High Central Land);
monazite (phosphate and rare earth oxide-bearing mineral)
in Kon Ray district, Gia Lai province;
ilmenite in the coastal area of Binh Thuan and Baria-Vung
Vietnams most established
mineral resource projects are discussed below.
Vietnam has emerged as a major phosphate producer in the South
East Asia region, and has nearly doubled production of the
phosphorus-bearing mineral apatite from about 1.1m. tpa in 2005
to around 2.1m. tpa in 2008.
The push for phosphate development
in Vietnam is clear: the country has 7m. hectares used for
agriculture and 12m. hectares of undeveloped land, which the
government is keen to improve.
The fertiliser requirement
for intensive farming in agriculture is very large and
increasing continuously every year, Tran said.
Over 90 deposits of phosphate rock
have been explored in Vietnam, the majority of them occurring
in limestones in the northern provinces of Lang Son, Nge Thin
and Thanh Hoa.
The Lao Cai deposit is the
countrys biggest phosphate resource, located on the
western side of the Red River. The apatite occurs in
metamorphosed phosphorites that can be found over 100km in
Total reserves are estimated to be
1.7bn tonnes, capable of producing a range of grades including
36-41% P2O5 down to below 16%
P2O5. Table 2 discusses some of
Vietnams recent phosphate expansions.
Vietnams tropical climate is ideal for the formation of
clays, and the country has some good deposits of kaolin and
refractory clays which have formed from high-alumina rocks such
Kaolin from Vietnam has long served
local ceramics industries, but high quality ball clays suitable
for export have also been exploited. Kaolin is mined in six
districts throughout the country including Dalat, Hai Hung, and
The Vietnamese coast is home to several deposits of high
quality silica sand, including Thuy Trieu, 18km from the Nha
Trang, which holds 22m. tonnes of reserves with an average
grade of 98.52% SiO2. The deposit is above sea level
which has aided its extraction.
Glass grade silica sand also occurs
on the islands of Hai Son and Van Sai, which is mined to supply
the glass industry in Hai Phong.
In late 2009 the government banned
the export of certain types of low-grade silica sand, namely
construction sand, in response to illegal mining of river sands
from the Mekong Delta River.
Regulation of sand dredging in the
Mekong Delta is considered imperative to prevent further
erosion of riverbanks in the regions. Dredging in the area
intensified last year following a ban on sand exports
implemented by the Cambodian government on its side of the
Since 2009 the stretch of the river
around the city of Can Tho has become a major trading centre
for sand, both illegally and legally dredged, transported for
use in construction projects around the region including
Singapore, Malaysia, Indonesia as well as the domestic
construction industry. Close to 10m. tonnes of sand was
exported from Can Tho last year, compared to 1.4m. tonnes in
The Nghe Tinh province is home to significant deposits of
barytes located in thin veins located over 60km of the region.
Average grades at two of the deposits, Bao Khe and Ngia Lam,
exceed 75% BaSO4.
Thick veins of barytes are also
located south-east of Tuyen Quang in Bac Thai province -
such as Cho Ra and Ngai Thang. Meanwhile, barytes deposits are
also associated with Vietnams rare earth resources in
Dong Pao, Lai Chau province, which contains about 2.9m. tonnes
of the oilfield drilling mineral.
In June 2009 Toyota Tsusho Corp. and Sojitz Corp. established a
joint venture to develop the Dong Pao rare earth deposits.
Operations are scheduled to start in 2011, supplying about
5,000 tpa RE minerals over a 20-year mine life. It is
understood that Toyota will begin importing 4,000 tpa RE from
In addition to the Dong Pao
deposit, which contains about 7m. tonnes of rare earth oxides,
Vietnam holds large rare earth deposits hosted in the
carbonatites of Fan Si Pan mountain in the north of the
The mineralisation comprises
bastnaesite, parisite, uranopyrochlore, gadolinite, pyrites,
apatite and significant amounts of barytes and fluorspar.
Kunr reports that the
weathered zone of the rare earth mineralisation contains 4-5%
RE oxides with the primary ore grading 1.4% rare earth oxide
(REO): (mainly Ce, La, Nd, Pr, Y, but also Gd and Eu Ð 4%
of REO), 1.1% Nb, 200-300 ppm U and 30% Ba.
The reserves amount to as much as
7.8m. tonnes of REO, from which 1.7m. tonnes are proven, at one
of the sites (Mau Xe North) alone.
The Lao Cai region contains the most important deposits of
graphite in Vietnam, which are found to the east of the Red
River. Proven reserves in this area total around 3.8m. tonnes
of graphite grading 5-12% C.
Several graphite deposits are found
around the Yen Bay area, south-east of Lao Cai, which are mined
for domestic consumption. Reserves here are thought to be 1.3m.
Elsewhere, graphite occurs in the
Precambrian sillimanite-garnet schists near Hung Nhuong. Proven
reserves of six main deposits stand at 2.5m. tonnes, with
massive graphite (30-50% C) and low grade graphite (6-8% C)
both mined here.
Vietnams economy has grown significantly over the past
decade, expanding at an average rate of 7.5% pa, with pledged
foreign investment totalling $64bn in 2008. The countrys
top investors are Malaysia, Taiwan, and Japan, with China
particularly focused on natural resource investment.
Total mining output has increased
400% since 1995, and, according to Tran, exploration work in
Vietnam has found 1558 deposits of non-metallic mineral
resources and industrial minerals.
There are 210 deposits of cement
raw materials, 131 deposits of ceramic raw materials, 35
deposits of refractory materials, 49 deposits of glass sand,
288 deposits of fertiliser materials, 145 deposits of dimension
and decorative stones, 609 deposits of common construction
materials, and smaller occurrences of semi-precious stones.
But, as Tran noted, the known
mineral resources are yet to be appropriately exploited,
processed and utilised, and exports remain low.
Implementation by the
countrys National Assembly of a new mineral law in 2005
has certainly provided more favourable conditions for foreign
investors, however, rumours of a new mining law due to be
announced in 2011 could cause uncertainty in Vietnams
The exact details of the new
law are still uncertain, but it is definitely happening,
one Vietnam-based analyst told IM.
But what can investors offer to
make their projects more attractive to the central
Be willing to spend the time
and efforts up front to allow for the Vietnamese government and
any Vietnamese partners to build a trust in you and a strong
relationship, one chromite explorer commented.
Find a competent Vietnamese
partner, preferably two; one representing the central
government and one to represent an interest for the host
province, he added. An attractive company is one
that can provide advanced technology and is willing to invest
in an A-Z project plan.
Tractus Asias Sequeros
agreed: If you find a local partner with the mining
rights, you can bring processing technology and capital to the
project Ð both of which the government deems interesting
for the country.
Finding a local partner which
already owns land removes one challenging aspect of the
Anything to do with land
acquisition is complex, Sequeros said. If a company
wants to get mining rights, or exploration rights, they have to
buy it directly from the government.
The only other option is to buy
land rights from another company which previously sought
government approval; however, in such cases the land rights
will have been approved based on it being used for a certain
activity. If the company buying the licence wants to change the
activity, the government again needs to be consulted.
Despite Vietnams bureaucracy, the country remains an
attractive venue for minerals investment. Generous incentives
combined with a high potential for growth in the domestic
market and a young, work-keen population, mean that foreign
companies willing to spend time building relationships with
local partners will generally be well rewarded.
Selected mineral deposits in Vietnam
Spotlight: bauxite and alumina
Vietnams primary commodity is coal, but bauxite
and phosphate rock are quickly emerging as two of its
significant mineral products. State mining company Vietnam
National Coal-Minerals Group (Vinacomin) holds a minimum 51%
interest in nearly all bauxite projects in the country, while
foreign investment has been capped at 49%.
The Department of Geology and
Minerals of Vietnam (DGMV) is keen to develop the
countrys rich resources and has set out exploration
targets for some of Vietnams key bauxite deposits.
In addition to bauxite exploration,
development work has been undertaken by Vinacomin and foreign
partners to start up new alumina plants. The majority of these
are targeted to produce smelter grade alumina, although some
non-metallurgical grades have been eyed. To date, the most
likely is Bao Locs two aluminium hydroxide plants, which
combined are forecast to produce 1.55m. tpa this year.
The governments push to increase its bauxite and
alumina production has spurred major logistics and
infrastructure projects - notably the Binh Thuan sea port
and the railway linking it to Tay Nguyen. By 2022 the rail and
port network are scheduled to handle 25-30m. tpa of
Bauxite exploration targets
||Mineable tonnages (m.)
|Dak Nong province
|Lam Dong province
|Mang Den, Kon Ha Nung bauxite deposits of Konplon
|Binh Phuoc province
|Cao Bang area
|Lang Son area
|Ha Giang area
Alumina plant investments
||Capacity (m. tpa)
|Bao Loc 1 aluminum hydroxide plant
||Doi Thang Loi deposit in Bao Loc - Di Linh
||2010 (new investment)
|Bao Loc 2 aluminum hydroxide plant
||Bao Loc deposit of Bao Loc - Di Linh
||2010 (new investment)
|Nhan Co alumina plant
||Nhan Co deposit and adjacent deposits of Dak Nong
||2010 (new investment)
|Kon Ha Nung alumina plant
||Kon Ha Nung and Mang Den deposits
||2011 (new investment)
|Dak Nong 2 alumina plant
||1 - 5 deposit and adjacent deposits of
Dak Nong area
||2011-2014 (new investment)
|Dak Nong 3 alumina plant
||Gia Nghia deposit and adjacent deposits of Dak Nong
||2012-2015 (new investment)
|Dak Nong 4 alumina plant
||Tuy Duc, Dak Song deposit s and adjacent deposits of
Dak Nong area
||2012-2015 (new investment)
||Capacity (m. tpa)
|Railway from Tay Nguyen to Binh Thuan sea port, phase
I (single track, 1435mm gauge)
|2013 (new investment)
|Binh Thuan sea port, phase I
|2012 (new investment)
|Railway from Tay Nguyen to Binh Thuan sea port, phase
II (double track, 1435mm gauge)
|Binh Thuan sea port, phase II