Profits of ever largest Thach Khe iron mine estimated at US$35 billion raised doubts

According to the report of Thach Khe Iron Joint-Stock Company (TIC), a ton of iron ore will be sold at the average price from VND 1.1 to 1.2 million (equivalent to US$50 - 51). This price is compared to the price of iron ore in the world’s market in 2018 (estimated to be US$55.5 per ton) and 2030 (estimated to be US$ 49.7 - 60 per ton).

However, at the conference "Appraisal on project for exploiting and processing iron ore at Thach Khe iron mine in Ha Tinh province" in Hanoi on 25 July, Pham The Minh, Vice President of The Federation of Civil Engineering Associations said that iron ore price are likely to decrease to US$ 40 to 50 per ton in the near future. The reasons are that the two countries Australia and Brazil, which are dominant in the world’s ore market, are continuing to increase their production volume. Meanwhile, China – accounting for 80% of the world’s iron ore consumption is likely to reduce its consumption.

For the domestic market, the demand for ore iron is generally low. TIC reported that 10 enterprises have committed to purchase iron ore produced from Thach Khe mine, including Kobe Steel Co., Ltd, Hoa Phat Steel JSC, etc..

At the conference, Dr. Do Huu Hao, former vice minister of Ministry of Industry and Trade, said that the iron ore in Thach Khe quarry has high zinc content; therefore, the demand is not high. Meanwhile, the exploitation faces difficulty due to geological conditions, disaster…. This might increase production costs reducing competitiveness of products and taking the risk of loss.

"Currently, the project is under investigation and consideration to be re-restarted, we must consider carefully how much economic profits are? Thach Khe iron mine is valued at US$35 billion; however, after deducting the cost of exploitation, how much net profits are? Because the project cannot be deployed when we have no idea whether it is profitable or not,” Hao emphasized.

Le Van Cuong from Association of Mining Science and Technology Vietnam, Thach Khe project should be more explicit in appraisal due to unclear economic benefits and insufficient assessment of environmental impacts.

"If we are not cautious, the incidents like bauxite incident in the Central Highlands will be incurred. If we agreed to lose US$140 million in 2009, we would not lose hundreds of billions of dollars in the future. Therefore, the State’s agencies, scientists and project investors have to continue studying and assessing the project’s feasibility, economic benefits as well as impacts on environment... to avoid serious consequences later," Cuong emphasized.