Capital shortage threatens Vietnam's largest iron ore mine

Thach Khe iron ore mine the largest of its kind in Southeast Asia

Ho Duc Binh, of general direcrtor of Thach Khe Iron Ore Joint Stock Company (TIC), said that four out of five major shareholders have yet to pay a combined VND234.645 billion ($11.26 million) of the funds they pledged between 2008 and 2010.

These companies include Ha Tinh Mineral and Trading Company (Mitraco), Song Da Group, Vinashin and Binh Minh Import-Export Production and Trade Limited Company.

In order to deal with the current lack of capital, TIC held a meeting on June 18 to request that these shareholders contribute the funds by July 18, 2011, Binh said.

Recently TIC has extended the deadline to October 15. To date, none of the shareholders have met their obligations.

He worried, though, that none of the partners show any signs that they would be able to contribute.

TIC is now owes VND254 billion ($12.19 million) for site clearance compensation, drilling fees, interest rates and salaries.

"Now we are only able to maintain our administrative offices because almost all of the subcontractors have withdrawn from the site. Banks, design consultants and our fuel suppliers have also ceased transactions with TIC," Binh said.

He emphasised that if these financial challenges are not dealt with immediately, the entire project could come to an end. In case this happens, Ha Tinh provincial authorities will have to find some way to ensure the livelihoods of thousands of local households who depend on the mine.

The Thach Khe iron ore mine covers a 38-square-kilometre area, which runs across six communes in Thach Ha district. The mine has estimated reserves of around 544 million tonnes of ore.