Mining sector suffers decrease in profitability
Mining sector suffers decrease in profitability
The mining sector has experienced a decrease in profitability as a result of the falling price of gold on the world market.
This year the gold price has dropped considerably to the point where some companies were doubtful of their ability to survive.
In the case of Phu Bia Mining, the company chose to tighten its belt by reducing the number of expatriate technical employees it had instead of the less acceptable alternatives of laying off local staff and/or suspending production, Chairman of the company Mr Chanpheng Bounnaphol told Vientiane Times at a recent Phu Bia Mining Roadshow in Vientiane.
These changes were made to enhance the capacity of the Lao workforce as well as reduce expenditure he explained as they would then try to place Lao people in those positions.
Lao people currently account for 80 percent of all employees at the Phu Kham and Huayxai sites, Mr Chanpheng added.
Mr Chanpheng explained that the decrease in profitability stemmed from the price of gold on the world market which has steadily dropped due to variations in the US economy, but the copper price is still stable and the company can make profit from it.
In the past year the gold price in Laos increase to almost 6 million kip per 15 grams (baht weight), but this year the price has fallen to about 4.7 million kip.
He said mining production at the Phu Kham and Huayxai sites still meets the target.
Some areas have a lot of mining activity but other areas not so much so to ensure the stability of production they need to enhance it.
We have recently invested US$35 million to improve our production by bringing in more modern machinery, Mr Chanpheng said.
He said the company largely exports its mined minerals to China.
The company is currently operating two mines at Phu Kham and Ban Huayxai in its 2,636 square-kilometre contract area.
In 2013, Phu Bia produced 64,885 tonnes of copper, 71,223 ounces of gold, and 317,754 ounces of silver from the Phu Kham site.
The production is scheduled to increase to a peak of approximately 90,000 tonnes per annum in 2018 and 2019.
The Huayxai site produced 112,546 ounces of gold and 637,603 ounces of silver.
Its production is scheduled to remain at about 100,000 ounces per annum until 2019 and 2020.
According to the Ministry of Energy and Mines, the mining sector expected mineral revenues to reach US$1,762 million in 2012-13, despite the price of gold falling, as the cost of copper and potash was still high.
The country exported mixed gold and silver concentrate worth US$257 million, US$711 million worth of gold concentrate, US$39 million worth of potash and US$32 million of iron ore.
