Vietnam gives away the best coal mine to foreigners

Vietnam gives away the best coal mine to foreigners

An open cast coal mine with the best coal quality in Vietnam has become the “fief” of an Indonesian company. Every year, the company pockets 90 percent of the profit, while the Vietnamese side can enjoy the remaining modest profit of 10 percent only.

Coal mine given for next to nothing

On April 19, 1991, the Uong Bi Coal Company (TUB), a subsidiary of the Vietnam Coal and Minerals Group (Vinacomin), signed a business cooperation contract with Pt.Vietmindo Energitama (VMD), a 100 percent Indonesian invested enterprise on the coal exploitation at Uong Thuong, Dong Vong mine.

Under the business contract, VMD would bring equipment and technologies to exploit coal for 30 years at the mine. The share profit ratio was fixed as follows: 90 percent of profits would belong to VMD, and 10 percent to TUB.

This is an open cast mine located on Vang Danh ward of Uong Bi City, where there is the best coal bed in Quang Ninh province.

Since this is an open cast mine, VMD just needs to carry out the exploitation on earth to be easily collect coal dust 4 and 5, the coal products with the best qualities. Meanwhile, other subsidiaries of Vinacomin, including Mao Khe Coal Company, Nui Beo Company, and even TUB, have to spend trillions of dong on equipment and technologies and use human physical strength to dig deeply into the earth’s surface by hundreds of meters to obtain coal.

Thanh Nien has found that the business contract signed by the two sides stipulates that VMD can only exploit coal for export. The contract stipulates that every year VMD can exploit 500,000 tons of merchandise coal, or 750,000 tons of crude coal.

However, in fact, in the last many years, VMD has always been exploiting more than the allowed level. In 2010, for example, VMD exploited 750,000 tons of merchandise coal, and the figure rose to 800,000 tons in 2011.

Also according to Thanh Nien, all the phases of the exploitation, selection and processing have been carried out in a close chain. The mining site and the coal sorting site have always been put under a strict control with no one going in or out.

Especially, VMD has a separate port that serves its coal export. Meanwhile, Vietnamese agencies and officials, who want to inspect the exploitation and export activities, can only go in with the permission of VMD.

What to do?

Pham Van Tu, Deputy General Director of TUB, while admitting that the Indonesia company is controlling the mine, said that this is “a problem created by historical conditions,” and that TUB is just the “successor”, and it is not on the right position to make decision on the issue.

Tu said that the contract was signed by TUB and VMD, but in fact, TUB did not have the right to make decision in the case. The project was then approved by the Ministry of Industry, now the Ministry of Industry and Trade.

Tu went on to say that TUB has many times asked VMD to renegotiate the contract, but the Indonesian partner has not accepted. This also means that Vietnam would continue to bear the current problems until the contract terminates, slated for 2021.

To date, VMD remains the first and the only foreign company which has cooperation with the Vietnamese coal industry.

“We have found out that we did not anticipate the problems that have risen when we signed the contract. There are many loopholes which bring disadvantages to the Vietnamese side,” Tu said.

There is no provision about the Vietnamese side’s right to stop VMD’s operation, even if VMD breaks the contract.

Thoi bao Kinh te Vietnam has quoted its sources as saying that the coal reserves left by January 1, 2011, had been 48 billion tons. Vietnam is considering buying coal mines in foreign countries to satisfy the high demand in the future which cannot be met by the domestic exploitation.

vietnamnet