Alcoa, China, and Russia’s UC RUSAL

Vietnam bauxite decision may affect Alcoa project


HANOI, April 29 (Reuters) – Vietnam said it would go ahead with a bauxite project in a $460 million contract with a Chinese company, but it will not sell stakes in such ventures to foreigners, throwing doubt over an Alcoa Inc (AA.N) deal.

ietnam holds the world’s third-largest bauxite ore reserves of 5.4 billion tonnes in the Central Highlands and it should tap the resource, Le Duong Quang, deputy industry and trade minister, said in a government statement issued late on Tuesday.

Quang’s comments followed a directive by the ruling Communist Party’s Politburo on April 24 that said Vinacomin, Vietnam’s top coal miner, should continue its Tan Rai complex in Lam Dong province and the Nhan Co project in Dak Nong province.

Vinacomin’s Tan Rai bauxite complex includes a $460 million alumina plant being built by China Aluminium International Engineering Co, the engineering arm of Aluminum Corp of China Ltd (Chalco) (2600.HK).

The Chinese company is building the operation under an Engineering, Procurement and Construction contract but will not take an equity stake in the project.

But Vinacomin will not sell any stakes in its bauxite projects to foreign investors, the Politburo said, a move that could cool the interest of Alcoa.

The two projects each aim to turn out 600,000 tonnes of alumina per year.

Last June Alcoa signed an agreement with Vinacomin to jointly conduct a feasibility study on the Gia Nghia bauxite project in Dak Nong province.

At the same time, Alcoa said AWAC, its venture with Australia’s Alumina Ltd (AWC.AX), could acquire a 40 percent stake in Vinacomin’s Nhan Co alumina refinery. [ID:nWNAS9067]

AWAC officials were not immediately available for comment.

Some scientists raised concern over the social and environmental impact of mining activities in the Central Highlands at an April 9 seminar in Hanoi.

The region, considered strategically important in Indochina, produces 80 percent of Vietnam’s coffee output and is also a key area for commodities such as pepper, rubber, cocoa and cotton. Coffee is not grown on soil containing bauxite ore.

Deputy Prime Minister Hoang Trung Hai called in the seminar for tight control over mining activities.

Vietnam has said it needed about $15.6 billion to invest in major bauxite and alumina refining projects by 2025 to make use of its vast, largely unmined bauxite ore reserves, most of them in the Central Highlands.

Russia’s UC RUSAL, the world’s largest aluminium producer, has a deal with a Vietnamese firm to build a $1.5 billion alumina refinery using bauxite from Binh Phuoc deposit in southern Vietnam outside the Central Highlands. (Reporting by Ho Binh Minh; Editing by Alan Raybould and Sambit Mohanty)

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