Vietnam's largest iron ore mine faces funding crisis
State-owned mining group Vinacomin may have to increase its stake in Southeast Asia's biggest iron ore mine, after several investors decided to withdraw from the US$642 million project.
Local media quoted the government as saying on June 21 that if the remaining investors failed to pump more money into the project by July 15, Vinacomin will have no choice but to take care of the funding problem itself.
Since work started on Thach Khe Iron Ore Mine in the central province of Ha Tinh in 2009, the project, estimated to cost over VND14 trillion (US$642.49 million), has been struggling with funding.
The initial plan was that 30% of the projected cost will be contributed by Thach Khe Iron Ore JSC, which is a joint-venture of nine companies including Vinacomin.
However, as of 2013, four of the company's investors, all state-owned companies, pulled out of the project, as part of their plan to restructure their own key operations.
By then the company's capital was over VND144.1 billion (US$6.6 million), of which Vinacomin owned 66.2%.
The company's management board has been ignoring the offer of Japanese-owned construction firm Kobelco to buy a stake since 2013, news website Dau Tu of the Ministry of Planning and Investment reported.
Located about 66 kilometers from Vung Ang Port, Thach Khe Mine was discovered in 1960 with 544 million tonnes of iron ore reserves, or more than half of the national reserves.