NATURAL RESOURCES IN VIETNAM

NATURAL RESOURCES IN VIETNAM

Vietnam is reasonably endowed with mineral resources including many that not been developed. Vietnam’s main natural resources consist of coal, phosphates, rare earth elements, bauxite, chromate, copper, gold, iron, manganese, silver, zinc, offshore oil and gas deposits, timber, hydropower . In 2003 mining and quarrying accounted for a 9.4 percent share of gross domestic product (GDP); the sector employed 0.7 percent of the workforce. Petroleum and coal are the main mineral exports. Also mined are antimony, bauxite, chromium, gold, iron, natural phosphates, tin, and zinc. Oil is being exploited by the PetroVietnam state monopoly while Vinacomin is the state owned giant that is in charge of the exploitation of Vietnam’s mineral and coal resources.

Reuters reported: “Geologists say Vietnam has significant quantities of copper, gold, tin, lead, zinc, gem stones, nickel, industrial and non-ferrous metals, clay and phosphate. Large deposits of coal have already been surveyed. Mining does take place in Vietnam, but apart from coal extraction much of it is small-scale, illegal and sometimes dangerous — mercury is still dumped in streams after being used to extract gold from rock. Vietnam has seen little major mining in recent decades also because of war and then central planning policies that only began to be rolled back a decade ago. [Source: Reuters, July 12, 1999]

Although Vietnam is relatively rich in natural resources, the country's protracted state of war has precluded their proper exploitation. Coal reserves, located mainly in the North, have been estimated at 20 billion tons. With Soviet assistance, coal mining has been expanded somewhat. Commercially exploitable metals and minerals include iron ore, tin, copper, lead, zinc, nickel, manganese, titanium, chromite, tungsten, bauxite, apatite, graphite, mica, silica sand, and limestone. Vietnam is deficient, however, in coking coal, which, prior to the outbreak of hostilities with China in 1979, it traditionally imported from the Chinese. Gold deposits are small. [Source: Library of Congress, 1987 *]

Vietnam's production of crude oil and natural gas was in very preliminary stages in the late 1980s and the amounts of commercially recoverable reserves were not available to Western analysts. With the cooperation of the Soviet Union, Vietnam began exploitation of a reported 1-billion-ton offshore oil find southeast of the Vung Tau-Con Dao Special Zone. By early 1987, the Vietnamese were exporting crude oil for the first time in shipments to Japan. Production remained low, estimated at about 5,000 barrels per day, although Vietnam's minimum domestic oil requirements totaled 30,000 barrels per day. Despite optimistic plans for developing offshore fields, Vietnam was likely to remain dependent on Soviet-supplied petroleum products through the 1990s. *

Vietnam's ability to exploit its resources diminished in the early 1980s, as production fell from the levels attained between 1976 and 1980. In the 1980s, the need to regulate investment and focus spending on projects with a short-term payoff pointed to continued slow development of the country's resource base, with the exception of areas targeted by the Soviet Union for economic assistance, such as oil, gas, coal, tin, and apatite. *

Japan and Vietnam Join Forces to Exploit Rare-Earth Elements

Ichiko Fuyuno wrote in Nature, “In an effort to overcome China’s near-monopoly on the supply of rare-earth elements, Japan and Vietnam have launched a joint research center in Hanoi to improve extraction and processing of the materials. Rare-earth elements include scandium, yttrium and the 15 lanthanides found towards the bottom of the periodic table. Their unique optical and magnetic properties are used in various high-tech applications, such as motors, catalysts, light-emitting diodes and batteries. [Source: Ichiko Fuyuno, Nature, July 13, 2012 +++]

“Most of the elements are actually more abundant in Earth's crust than precious metals such as gold or platinum, but the properties of the 17 rare-earth elements are so similar to each other that extracting and purifying them requires sophisticated processes. Mining of rare-earth elements is dominated by China, which produces 98 percent of the world's supply of these metals. In recent years, China has set limits on its exports of rare-earth elements, driving up global prices and forcing other countries to invest in exploiting their own resources so that they can supply their high-tech industries. "Japan is the second-largest consumer of rare-earth products after China, but it could catch up in a few years if the Japanese government gives proper backing," says Yasushi Watanabe, an expert in mineral processing engineering at the National Institute of Advanced Industrial Science and Technology (AIST) in Tsukuba, Japan. +++

“The Rare Earth Research and Technology Transfer Center was officially opened in Hanoi on 16 June, kitted out with 420 million yen (US$5.3 million) of equipment. The center has yet to launch any research activities, but it is already testing its mineral roasters and mixer-settlers to extract rare-earth elements from minerals. At the new center, several Japanese researchers will collaborate with scientists from Vietnam’s Institute for Technology of Radioactive and Rare Elements, also based in Hanoi. "Properties of minerals differ between mines, so we aim to establish the optimal methods to produce high-quality rare-earth products," says Yoshiaki Igarashi, chief representative of the Hanoi office of the Japan Oil, Gas and Metals National Corporation, which oversees the new center. +++

“Japanese companies are already mining rare-earth mineral deposits in Kazakhstan, India and Australia, as well as in Vietnam. But "the [Japanese] government’s involvement in rare-earth research in Vietnam reflects a rapidly growing sense of crisis in Japan" that the island nation will face a serious supply crunch, says Watanabe. Specific details of research at the center are still under wraps, but work will involve establishing core technologies to separate and concentrate the prized elements, he adds. +++

High Costs, Regulations Deter Foreign Miners in Vietnam

In 1999, Reuters reported: “ Geologists should be crawling all over Vietnam, scouring a land that experts believe could hold significant mineral deposits. But tough regulations and high costs have made Vietnam too risky for all but the most hardy foreign miners. Lawyers and diplomats say Hanoi has squandered a golden opportunity to attract foreign capital into the mining sector, create jobs, obtain advanced technology and learn about international industrial safety and environmental standards. They said a critical problem was the 1996 Mineral Law, which governs mining in communist-ruled Vietnam. "Vietnam could have a very vibrant mining industry but the law is just not conducive to large-scale foreign investment,'' said Australian Ambassador to Hanoi Michael Mann, who has urged the government to make regulatory changes. [Source: Reuters, July 12, 1999 ==]

“Under the law, firms can apply for a mining licence only after completing exploration. But the law does not give the explorer exclusive rights to mine their discovery, only so-called "special rights,'' a term lawyers say is too vague. In addition, miners need a separate investment licence. But the conditions of that licence cannot be negotiated until after exploration, leaving miners exposed to the risk of unfavorable terms on royalties, taxes and other obligations after having sunk funds into exploration. The result: Since the Mineral Law came into effect no big foreign investors have sought mining licences, or even tested the "special rights'' clause. Hanoi says around 26 exploration licences have been issued under the law. ==

“Besides the problems with mining and investment licences, areas allocated for prospecting were too small and the duration of exploration licences too short. The report also said prospecting fees were excessive while Hanoi's right to ban or restrict export of raw minerals increased risks for miners. The Hanoi Moi (New Hanoi) newspaper on May 2 quoted a department official as saying the government saw no problem with the Mineral Law. Indeed, lawyers and foreign miners who have discussed the Mineral Law with officials say the general response is that foreign companies should trust the system. ==

“Robert McLean, a geologist who has lived in Vietnam for eight years, said beyond the Mineral Law another problem was that state firms had the industry in a tight grip. "The state-owned enterprises don't want foreign investment in the sector. There are a lot of vested interests in mining,'' Maclean told Reuters. "Vietnam has a lot of potential for mining, maybe not as much as Indonesia or the Philippines but better than other countries in the region. But there are very few drill holes out there and very little money being spent on exploration.'' ==

“That potential was good enough to attract big players in the early 1990s, but many have since left, including Newcrest Mining Ltd and Westralian Sands Ltd. Westralian recently changed its name to Iluka Resources Ltd Other problems in Vietnam include poor infrastructure for transporting mined minerals, while state and foreign miners have complained about a lack of law enforcement when local people, seeking to exploit minerals, encroach on concessions. Industry executives also say that Vietnam is only focused on attracting big mining players, not realising that a lot of exploration, especially in remote areas, is conducted by nimble entrepreneurial companies. ==

Vietnam has issued a rule that will force firms seeking to tap natural resources to protect the environment at their mining site by paying cash deposits or mortgaging assets at local banks. The official Tuoi Tre (Youth) newspaper said the cash or mortgaged assets would be used to ensure firms protected the environment, although it did not say how authorities were entitled to act in the event of non-compliance. If mining was expected to last less than three years, firms would pay a one-off cash deposit equal to the expected cost of protecting the environment, the paper said, without giving details on how that charge would be determined. For mining of more than three years, deposits could be paid in tranches, the newspaper added. [Source: Reuters, November 3, 1999]

Bauxite Mines Vietnam

According to the United States Geological Survey, Vietnam is estimated to hold the world's third-largest bauxite ore reserves, after Guinea and Australia. The majority of Vietnam's reserves are located in the Central Highlands (Tây Nguyên) and have only been minimally mined. Bauxite is typically strip mined and is used to produce aluminum. According to estimates by Vietnam's Ministry of Industry and Trade, Vietnam's reserves in the Central Highlands amount to 5.4 billion tons. Despite its large reserves, Vietnam produces only 30,000 tons of bauxite per year. In November 2010, Nguyen Tan Dung, the prime minister of Vietnam, announced that Vietnam's bauxite deposits might total 11,000 Mt; this would be the largest in the world. [Source: Wikipedia + ]

A draft mining plan for bauxite was approved by the Vietnamese government in 2007. Vinacomin, a Vietnamese mining company, has laid out a plan for 6 bauxite mining projects covering over 1800 square kilometers in Vietnam's mountainous Central Highlands. The first two processing plants for the plan have been contracted to Chalco, a Chinese mining company. The Nhan Co project in Dak Nong Province and the Tan Rai complex in Lâm Dong Province are expected to produce 600,000 tons of alumina per year. Vietnam has indicated that it needs about $15.6 billion to invest in major bauxite and alumina refining projects by 2025. Prime Minister Nguyen Ta'n Dung has approved several large mining projects for the Central Highlands, asserting that bauxite exploitation is "a major policy of the party and the state." +

The mining plans have met with strong criticism from scientists, environmentalists and Vietnam's general population. Forests and agricultural land used by coffee and tea farmers are threatened by the plans and opponents have raised concerns about the toxic waste red mud generated through the refinement of bauxite. Vietnamese general Vo Nguyen Giap has offered strong criticism of the plans, saying that a 1980s study led to experts advising against mining due to severe ecological damage. +

See Blocking a Bauxite Mine: Rallying Point for Vietnamese Environmentalists

Vietnam Has Nearly 500 Accident-Prone Gold Mines

In Ba Kan Province 150 miles north of Hanoi people illegally pan for gold. If they are lucky they collect enough gold dust to buy a few kilos of rice. Agricultural land around the rivers has been dug up and made unproductive by the miners.

In 2006, Xinhua reported: “Vietnam has spotted 500 gold deposits and verified reserves totaling 300 tons in 30 of the deposits, local media reported Tuesday. Most of gold mines are located in northern mountainous provinces including Hoa Binh, Thai Nguyen, Bac Can, Cao Bang and Lang Son, Young People newspaper quoted a report of the Vietnamese Trade Industry. [Source: Xinhua, May 23, 2006 \~/]

“According to the industry's assessment, Vietnam should establish a gold complex with annual gold production capacity of one ton in the Doi Bu area in Hoa Binh. The Na Pai area in Lang Son has an estimated gold reserve of 30 tons, but the country finds it hard to exploit gold there, since the exploitation requires complex technologies. Now, all gold exploiting businesses in the northern mountainous region have stopped operation, since their outdated technologies have resulted in low economic efficiency and big loss to natural resources, said the newspaper. \~/

“Vietnam's first gold plant with an annual refining capacity of 180,000 tons became operational in central Quang Nam province in early April. The plant, owned by a joint venture between two local companies and a Canadian one, is exploiting ores from the Bong Mieu gold mine with an estimated reserve of at least eight tons of gold to produce 600 kg of the precious metal annually. \~/

In 2011, the Strait Times reported: “Six people died when an illegal gold mine collapsed in central Vietnam, a government official said, in the latest incident of its kind. The accident in Quang Nam province occurred during heavy rains last Sunday, said local official Pham Thi Nhu, who added that authorities had only now learned of it because the mine is in a remote forest. Quang Nam is known for illegal gold extraction. The official said the victims were members of an ethnic minority, a segment of the population which the United Nations says is far more likely to live in poverty. ‘Sometimes, there were 200 to 300 people working in the gold mine. When we sent teams to chase them, they ran away into the forest. Then when we went home, they returned to the gold mine immediately.’ In early May local media reported that five people died when another illegal gold mine collapsed in Nghe An province of north-central Vietnam. [Source: Strait Times, June 22, 2011]

Pearls in Vietnam

Vietnam is the source of extremely rare orange pearls. Most pearl experts have never seen one. They don't come from oysters but from a rare snail called a melo melo that is found almost exclusively in Halong Bay. Fishermen occasionally pull the shells up in their nets but only rarely do they find a pearl and more often than not the pearls are irregular fragments. There is maybe a one in a million chance of finding melo melo with a pearl. [Source: James Traub, Smithsonian magazine]

One former member of the Nguyen court told Smithsonian magazine, "Burma was famous for jade, Thailand was famous for ruby, and Vietnam was famous for pearl. Many, many people were assigned to dive for pearls, also to look for other tribute objects, such as ivory and sandalwood. And it was considered mandatory to bring nay fine specimens to the emperor."

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Vietnamtourism. com, Vietnam National Administration of Tourism, CIA World Factbook, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, Fox News and various websites, books and other publications identified in the text.

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© 2008 Jeffrey Hays

Last updated May 2014

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