Mining to Vietnam
(Last updated: 8 Jul 2011)
Trends and opportunities
The market
As one of the fastest growing economies in Asia, Vietnam’s economic boom has lifted the contribution of mining to the country’s GDP and boosted the share of mining-related FDI accounted for by the country.
Increasing involvement by foreign companies has helped to improve the country’s relatively underdeveloped mineral wealth.
Vietnam’s rich mineral reserve, which includes bauxite, remains largely untapped. Until recently, mining activity has primarily involved small-scale, local operations. Extraction has focused on non-metallic minerals, notably coal and construction materials.
Foreign investment in mining has been minimal, constrained by what was, until relatively recently, an uncertain regulatory framework. The Prime Minister appears to be playing a direct role in approving foreign investments, reflecting the sensitivity surrounding foreign participation in on-shore mining activities.
Australian interest in Vietnam’s mining sector is small but growing.
The industry is dominated by the state-owned Vietnam Coal and Minerals Industries Corporation (Vinacomin). Under Vinacomin there are two groups of companies: coal and minerals.
Coal
Vietnam has huge coal reserves, concentrated in the northern area in Quang Ninh province and the Red River Delta basin.
The coal-mining industry is owned and operated by state coal mining company Vinacomin, which operates on most of the coal mines in Vietnam. There are 27 open mines and 30 underground mines.
Currently development is stable, satisfying domestic demand and in balance with exports. The government plans to encourage new investment by upgrading and expanding current production, and increase exploitation from 40MT in 2010 to about 60MT by 2025.
Vietnam is seeking to increase production of its deeper anthracite reserves with high quality grade and expand its power sector. Purchase of heavy mining equipment from Australia has enabled the expansion of existing underground mines and development of new underground mines.
Minerals
The market is dominated by Vietnam National Minerals Corporation (VIMICO) under Vinacomin.
Major mineral projects include:
- Sin Quyen - Lao Cai Copper Complex Project, capacity of 10,000 tonnes to be increased to 30,000 tonnes/year
- Thai Nguyen Zinc Refinery Plant project with the capacity 10,000 tonnes/year
- Lao Cai Cast -Iron Refining Plant project with the capacity 30,000 tonnes/year
- Phu Yen Diatomite Filter Aid Powder Plant project
- Tien Giang Brick Plant project, the beginning capacity is 12 millions pieces
- Thach Khe iron ore mine is operated by Vinacomin, Vietnam Steel Corp and others
- Lam Dong and Daknong bauxite alumina complex project under Vinacomin
Opportunities
Opportunity areas in the Vietnam mining industry include:
- Coal refining and processing technology, underground coal mining
- Bauxite mining and alumina processing plant equipment
- Equipment and machinery for coal processing
- Consultant services, technical engineering and processing design
- Sample analysis technology and services
- Minerals processing technology in general
- Mining equipments and machinery: mining pump, drilling services, material handling systems, spare and replacing parts
- Mining software
- Coal export to Vietnam
Competitive environment
Local and private groups: Cavico Group, Hoa Phat Group, Vietnam Steel Corporation, Viet Phuong Group.
Foreign mining companies: Asian Mineral Resources, Nui Phao Vica, Triple Plate Junction, Ban Phuc Nickel.
Tariffs, regulations and customs
Vietnam’s new mining law aimed at securing greater certainty is currently awaiting review and approval by the National Assembly.
Tariffs currently applied to mineral goods in ASEAN countries are generally low, with those in the zero to five per cent range predominating, and many of these will be eliminated early in many ASEAN tariff reduction schedules under AANZFTA, which entered into force on 1 January 2010.
Key highlights from the AANZFTA on Australia’s top three exports to Vietnam include:
- Petroleum oils - crude (2709.00) – 15 per cent tariff phased to zero per cent in 2016
- Oils/preparations other than crude, containing >70 per cent by weight of such oils (2710.11) – exclusion from tariff commitments
- Lead ores/concentrates (2607.00) – bound at zero per cent on EIF
Marketing your products and services
Market entry
Australian companies need to keep regular contact with key market players and identify projects at an early stage. Companies should also maintain good relations with end-users and identify the right distribution channels.
Barriers to entry
Complicated transaction system, strong competition with Chinese products and a lack of transparency in the procurement process are constraints to ease of business within the sector.
Links and industry contacts
Government, business and trade resources for Vietnam
Department of Geology and Minerals of Vietnam – www.dgmv.gov.vn
Ministry of Industry and Trade – www.moit.gov.vn
Ministry of Natural Resources and Environment – www.monre.gov.vn
Vinacomin Group – www.vinacomin.vn
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.