Steel plant gains initial green light

Project developer, the Vietnam Steel Corporation (VSC), was last week asked by the government to complete a feasibility study as soon as possible so mining could start in 2005.
VSC official Nguyen Phuc said a French consultancy company had been hired for the feasibility study, which it expected to be completed early next year.
“Comprehensive studies include the investment scale, the actual exploitable capacity and the selection of appropriate processing technologies at Thach Khe, which will help VSC determine the actual investments at the mine,” Phuc said.
Development of Thach Khe will include iron ore exploitation at Thach Khe mine, construction of a steel plant with an annual production output of 4.5 million tonnes in Ky Anh district. A sea port capable of handling vessels of up to 100,000dwt will also be constructed.
“We anticipate that the project will require huge funds for completion, making it difficult for VSC to go it alone. However, the project is considered economically strategic, so we will attempt to realise it,” Phuc said.
The Thach Khe deposit was discovered by Soviet and Vietnamese geologists in the 1960s. At that time, geologists estimated Thach Khe had iron ore reserves of some 500-600 million tonnes, at least 300 million tonnes of which were thought to be commercially exploitable.
However, recent geological tests cast doubt on these findings. Since 2001, Russian geologists invited to participate in the project by VSC have been carrying out further studies, in order to provide an accurate assessment of the mine’s potential.
Although a project planning to exploit the reserves was cancelled in 1997 due to uncertainty about its profit potential, Phuc said VSC saw the idle Thach Khe mine as an excellent way of reducing reliance on foreign imports.
In August 1997, a consortium of VSC and multi-national mining corporations from Germany, South Africa and Japan decided to abandon a $1.3 million project at Thach Khe, saying that it was unable to meet its investment criteria.
The project cancellation followed the completion of a one-month exploration study which revealed the Thach Khe deposit was smaller and of lower quality than first anticipated.
The consortium’s foreign partners complained that mining Thach Khe deposit was not economically viable after drilling samples indicated “increased geological and chemical variability, increased structural complexity and a decrease in mineral resources”.
Furthermore, studies concluded that the deposit carried an unacceptably high zinc content, which would complicate steel-making procedures.
In 1998, the Japan International Cooperation Agency (JICA) wrote a pre-feasibility study on the Thach Khe project.
The agency calculated that the total required investment would amount to $6 billion for complete development of Thach Khe steel complex, including construction of a 4.5 million tonne steel-making facility.
At that time, JICA suggested that the project then would not be economically viable in the short term and that such a sizeable complex should only be built after 2010.