This was announced by Deputy Minister of Planning and Investment Dang Huy Dong at the government's regular press conference on August 30, according to information published on the Government Portal.
“The proposal was made after careful consideration, especially after the fact-finding mission of Minister Dung. The miniter proposed the government to immediately scrap the project due to concerns over the investor’ low financial capacity, environmental risks, and high transportation costs,” Dong said.
According to Minister and Chairman of the Government Office Mai Tien Dung, there has yet to be an official plan to spell out Thach Khe’s fate. Previously, at a working session with the Ha Tinh People’s Committee, the prime minister asked the province to prepare a science-based and objective assessment report on the project. After receiving the assessment report, decision will be made by the government.
In early August, MPI warned about severe environmental risks and urged the government to immediately terminate the mine.
According to MPI, the investor of the project, Thach Khe Iron JSC (TIC), still does not have the required finances, even though they had adjusted the investment capital twice within three years. In 2014 the approved investment was VND14.5 trillion ($637.9 million), which was reduced to VND13 trillion ($571.9 million) in 2016 and VND12.2 trillion ($536.7 million) in 2017.
These approved figured still failed to take into account all costs. The lack of long-term outlets was also in question. Only Hoa Phat Group agreed to buy three million tonnes of iron per year during 2017-2021.
In addition, there are various concerns about adverse environmental impacts on the surroundings and local lives. The project has not even been approved by the provincial people's council, the people's committee, and the national assembly deputies of Ha Tinh.
However, MPI’s proposal has received fierce opposition from the Ministry of Industry and Trade (MoIT), Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin), and especially TIC.
According to newswire Vietnamnews, MoIT said in a press statement that MPI’s proposal was not based on scientific and practical considerations. It added that an alternative proposal would be submitted to the prime minister for approval.
MoIT requested the government to consider the capital volume of approximately VND2 trillion ($87.98 million) invested over the past 10 years. Besides, MoIT raised concerns that the termination would affect the investment and business environment in Ha Tinh.
It also called on the government to consider the project’s impact on Vietnam’s industrial and economic development, its contribution to the GDP and reducing the country’s trade deficit.
Regarding TIC, Nguyen Quoc Hung, TIC’s CEO, said he could not understand why he should stop mining at Thach Khe, a good iron ore mine.
Vietnam still has to import iron ore and will need 15.5-18 million tonnes by 2020.
Although the project has been suspended, the company is still investing in support works to improve environmental and security conditions.
Regarding the concerns about capital arrangement, Hung said that several financial institutions have promised to provide loans.
The company will sign credit contracts soon after receiving the prime minister’s approval for the project. The company will then have the money to resume the project.
Vinacomin said that the reasons cited by MPI to terminate the project, including problems in environmental protection, financial capability, and iron consumption, are ‘groundless.’ The miner has conducted thorough research on the issues and found viable solutions.
The Thach Khe iron mine project received its investment certificate in 2008. In the same year, the feasibility and environmental impact reports were approved.
In 2011, the project was suspended because the reports were no longer “appropriate to the actual situation.” It was subsequently adjusted. The new environmental impact report was approved in 2013. The adjusted scale and investment capital was approved in 2014. The technical design is still being evaluated by MoIT.
Earlier, in an October 2016 resolution, the prime minister asked MoIT to complete all procedures so that the Thach Khe mine project can start in the first quarter of 2017.
In November, the Ha Tinh authorities requested that the government direct all related agencies to research the project all over again in every aspect, including the capacity of investors, sources of funding, social and economic impacts, technology, market, human resources, and environmental impacts.
However, in January 2017, the construction of the project was suspended due to financial difficulties.