Pham Dinh Thuy of the GSO’s Industrial Statistics Department said the local mining industry’s production growth is predicted to drop by 9% in the second half of this year.
The office said the mining industry’s production growth declined 2.9% compared to the same period in 2015 because the price of ore, coal and crude oil on the world market had also dropped, while production costs remained high.
The An Thong Mining Investment Joint Stock Company, a subsidiary of Hoa Phat Group, gave back two iron ore mines to the Government after world prices of iron ore dropped 30 to 50% compared to early 2014.
Hoa Phat must therefore import iron ore for its production instead of mining it locally.
Ha Giang Province had 52 mineral mining projects but by the end of 2015, only 11 were operational, 20 were suspended and the remaining were closed.
The volume of coal mining by the Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin), the largest ore miner in the nation, dropped by 2 million tonnes this year compared to its target goal.
Nguyen Van Bien, Vinacomin’s deputy general director, said the group wants to make up for the lagging production in the first six months by the end of the year, reported Dien Dan Doanh Nghiep newspaper.
Exploitation of crude oil has encountered similar difficulties though the global price of crude oil recovered to around US$50 per barrel.
The GSO said that in order to make up for lost production in the first half of 2016, the Vietnam National Oil and Gas Group (PVN) must increase the volume of crude exploitation by 2 million tonnes in addiition to the 14 million tonnes at present.
According to experts, the local mining industry also has to contend with the July 1 increase in natural resources tax, from 9% to 12% for surface mined coal, and from 7 to 10% for coal mined underground.
The Government’s tax increase is aimed at reducing coal exploitation due to limited reserves, said Thuy.
Nguyen Duc Long, Director of Hoang Long Mineral Company, said the Government planned to limit coal exploitation and encourage processing of mineral products but enterprises are hard ppressed to obtain capital for the construction of mineral processing factories.
He proposed the State help business with soft, long-term interest loans to cover the needed capital needs.