Vinacomin divestment opens large opportunities for investors

Vimico and VVMI are both promising investment opportunities (Illustration image)

At present, Vietnam National Coal and Mineral Industries Group (Vinacomin) owns a 98.06 per cent stake in Vinacomin Minerals Holding Corporation (Vimico) and a 98.19 per cent stake in Vinacomin-Vietbac Mining Industry Holding Corporation (VVMI). According to Vinacomin’s divestment plan, it will divest 33.06 per cent, equaling 66.12 million shares, from Vimico and 33.19 per cent, equaling 34.84 million shares, from VVMI.

Vimico—Vietnam’s largest copper mining firm

Vimico completed the equitisation in 2015 and its shares were listed on UpCOM in 2016.

The company, which is considered one of the key subsidiaries of Vinacomin in the mineral mining sector, specialises in exploiting a variety of mineral reserves, including gold, silver, copper, iron, tin, lead, and zinc. Copper is the primary item in the company’s diversified portfolio.

According to Nguyen Tien Manh, general director of Vimico, the company is one of the few enterprises holding copper mining rights. Vimico currently owns the mining rights over Vietnam’s largest copper reserve, the Sin Quyen copper complex that holds a reserve of 19.26 million tonnes of ore, and Vi Kem copper mine, which holds 5.15 million tonnes.

The Sin Quyen copper complex started operations in 2006 with a total investment capital of VND1.3 trillion ($56.7 million). The complex sorts ores containing more than 0.8 per cent copper with a recovery rate of 92-97 per cent due to cutting-edge technology and synchronous equipment.

Besides, Vimico owns controlling or partial stakes in 15 other mineral mines, many of which have long-term mining rights for precious metals.

As the selling price of metals have been recovering since 2006, Vimico has been reporting sparkling results. Notably, in the first eight months of this year, Vimico acquired VND3.54 trillion ($150.6 million) in consolidated revenue and VND150.3 billion ($6.56 million) in consolidated pre-tax profit, signifying increases of 46 and 75 per cent, respectively.

Vietcombank Securities Limited Company (VCBS) considers Vimico to have massive development potential due to the increasing demand for metal in general and copper in particular. VCBS expects that in 2017 Vimico will see soaring revenue and profit, expecting VND5.44 trillion ($237.4 million) in revenue and VND263 billion ($11.5 million) in profit.

VVMI—the corporation holding the rights over two-thirds of domestic coal reserves

The company is one of the four leading coal exploitation enterprises of Vinacomin, carrying the chartered capital of VND1.05 trillion ($45.8 million).

It specialises in coal, cement, construction materials, mechanical businesses. It currently manages and exploits three large-scale coal mines, making up two-thirds of Vietnam’s coal reserves, namely Na Duong in the northern province of Lang Son, Nui Hong and Khanh Hoa in the northern province of Thai Nguyen.

According to Tran Hai Binh, general director of VVMI, these three coal mines are included in the Vietnam coal industry development planning to 2020 with vision to 2030. 80 per cent of VVMI’s annual exploited coal volume is served for thermal power plants, namely Na Duong, Cao Ngan, and An Khanh, and another 10-15 per cent goes to cement manufacturing factories, namely La Hien, Quan Trieu, and Tan Quang.

Thanks to the recovering selling prices of coal and cement, VVMI’s business results have been improving since 2015. Notably, in the first six months of this year, VVMI has earned VND1.88 trillion ($82.1 million) in consolidated revenue and VND30.7 billion ($1.34 million) in consolidated pre-tax profit. The figures are expected to reach VND4.3 trillion ($187.7 million) and VND93.8 trillion ($4.09 million) for the whole year.

According to VCBS’ expectations, along with VVMI’s stable output of over 80 per cent of the exploited coal volume, the company’s long-term development potential are shown by commitments of launching Na Duong 2 mine by 2020 as well as increasing the exploitation capacity of Khanh Hoa mine.

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