Thach Khe iron ore mining works get cash injection

Following the move, the Thach Khe iron ore mining works will be capitalised at VND14.5 trillion (nearly $700 million), aiming to mine five million tonnes of iron ores annually in the first phase and 10 million tonnes in the second phase. Located in the central province of Ha Tinh, geologists estimated the Thach Khe deposit had iron ore reserves of some 500-600 million tonnes, at least 300 million tonnes of which is thought to be commercially exploitable.

A senior official of the Thach Khe Iron Joint Stock Company (TIC) - the project developer, told VIR that the approved investment rise would importantly offer feasible solutions to the restructuring plan in TIC, which was said to be one of the principle reasons behind the project’s delay since mid-2011.

Established in May 2007, TIC which was formerly comprised of Vinacomin with 30 per cent, state-run Vietnam Steel Corporation (20 per cent), Ha Tinh Mining and Trading Corporation or Mitraco (24 per cent), VNPT (4 per cent), Song Da (5 per cent), BIDV (5 per cent), Vinashin (5 per cent), Bitexco (4 per cent) and Thang Long Mineral (3 per cent). In 2012, BIDV, Song Da, Vinashin and VNPT exited the project, selling their stakes to Vinacomin.

Vinacomin previously asked for prime ministerial approval to raise its stake in TIC from 49 to either 54 or 60 per cent, and Vietnam’s leading private steel maker Hoa Phat expressed interest to take a piece in the mining firm.

Meanwhile, Japan’s Kobe Steel, the world’s fourth largest steel maker, which is developing a $1 billion/2.4 million tonne steel plant licensed in 2008 in the central province of Nghe An, early this year gained the government’s in-principal approval to hold a stake in TIC. However, the exact percentage of stake that Kobe Steel could hold has not been yet been clarified due to TIC’s unsettled restructuring plan.

The revival of the Thach Khe mining project is being keenly followed by both Kobe Steel and Taiwan’s Formosa, whose $10 billion steel refinery and port complex is under construction in Ha Tinh, since the two steel makers look at Thach Khe iron ores as their sufficient raw materials.

Formosa reported that its first blast furnace would start operations in 2015 with the initial capacity of 7.5 million tonnes of steel products per year. Meanwhile, construction of Kobe Steel’s steel plant has not started yet.