VietNamNet Bridge – Affirming that bauxite projects would be profitable, the Vietnam Coal and Mineral Industries Group (Vinacomin) has asked for the preferences in borrowing capital, tax incentives and fee reductions to help ease difficulties.

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According to Vinacomin, the two alumin projects Lam Dong and Nhan Co both are developed in the localities with very difficult socio-economic conditions, therefore, they are the subject to investment incentives.

However, to date, the projects can only enjoy the land leasing fee reductions, the tax incentives in importing equipment and machines.

Meanwhile, Vinacomin’s request on the other investment incentives, including the preferences in accessing capital from the state’s sources has not received any replies from relevant agencies.

As competent agencies turn a deaf ear on Vinacomin’s complaints, the group now has to borrow commercial loans from domestic and foreign sources and seek capital from bond issuance.

The interest rates of the commercial loans are high, 4-5 percent for foreign currency loans and 13 percent for dong loans. The capital would be funneled to the Lam Dong project.

As for Nhan Co, the project is awaiting the capital to be raised from the bond issuance, for which Vinacomin has to pay the interest rate of 12 percent per annum.

It’s now very difficult to borrow money from banks, while the interest rates are very high. Even if Vinacomin can access bank loans, it would have to pay money back after a short time, which would affect the implementation of the two projects.

Therefore, Vinacomin has requested the Prime Minister to instruct relevant agencies to provide the investment incentives. The mineral industries group wants the preferential loans from the Vietnam Development Bank, the post-investment support and the government’s guarantee for foreign loans.

In fact, the guarantee has been obtained for the Lam Dong project, while the group is still conducting negotiations for foreign commercial loans.

Not only begging for tax incentives and loan preferences, Vinacomin has also  asked for the environment fee cut.

In principle, the environment fee for bauxite mining projects is 25-30 times higher than for the soil exploitation projects.

Bauxite mining projects bear the fee of VND30,000-50,000 per ton, while the land exploitation for construction works bears the fee of VND1,000-2,000 per cubic meter only. The highest fee is now imposed on the land exploitation for making gypsum, at VND3,000 per cubic meter.

It takes VND40,000-50,000 to exploit one ton of crude bauxite ore. With the environment fee of VND30,000-50,000 per ton, or VND51,000-80,000 per cubic meter, the fee is nearly equal to the exploitation cost. Meanwhile, the environment fee for coal mining is only one percent of the exploitation cost.

Vinacomin believes that the fee is overly high which is unbearable for bauxite exploitation projects.

Vinacomin has asked the Prime Minister to cut down the environment fee to VND4,000 per ton of crude oil, or VND7,000 per cubic meter, which is equal to 10 percent of the bauxite ore exploitation cost.

It has also asked for the tax exemption for the import of the two materials which could be made domestically for five years since the day the projects began their production.

Regarding the environment fee, analysts believe that the proposal would be rejected by the Ministry of Finance, which believes that the current fee levels are not high enough to treat the environment consequences caused by the mining.

Pham Huyen