|BPNM's nickel processing plant|
In 2007, Asian Mineral Resources Limited (AMR), a global mining group listed on the bourse in Toronto, Canada, was granted the licencee to exploit and process ores in the Ban Phuc nickel ore mine, which has a reserve of more than 200,000 tonnes of nickel and 18,000 tonnes of copper.
According to the initial plan, AMR will co-operate with domestic enterprise Son La Mechanical Engineering JSC to establish BPNM, with AMR holding 90 per cent, to develop the project which lies 160 kilometres northwest of Hanoi in Son La province. BPNM envisioned starting production in mid-2009.
However, due to low market demand, the project halted construction in 2008 to await better market conditions.
The project finally started mining and processing activities in May 2013. At that time, BPNM poured $136 million into developing the plant and took it into operation with the annual exploitation capacity of 360,000 tonnes of ores and processing capacity of 70,000 tonnes of refined ores.
By the end of November 2013, BPNM has produced and exported 10,503 tonnes of refined nickel ore with an average concentration of 9.5 per cent.
However, in February 2014, BPNM proposed the government to reduce refined nickel ore export tariff from 20 to 10 per cent to sustain production.
According to Evan Spencer, BPNM’s general director, the plunge in the global price of nickel had brought down domestic prices in turn.
Meanwhile, taxes and associated fees are high in Vietnam and account for 32 per cent of BPNM’s revenue, which includes 20 per cent export duties, 10 per cent environmental tax, and 2 per cent of other associated fees. Furthermore, the company has to to pay numerous other fees, including land leasing fee and corporate income tax.
BPNM executives said the Vietnamese nickel business is taxed even higher than in Laos, where the export duty on ores is 5 per cent only, and claimed that only operating costs would be covered after taxes.
At the time, BPNM even threatened closing the mining site in late May, unless given timely support.
However, the government refused BPNM’s proposal. As a result, in 2014 alone, the company suffered a loss of approximately $20 million.
Despite Vietnam refusing to reduce the export tariff on refined nickel ore, the company maintained operations in the red before eventually deciding to suspend operations in September 2016.
As of May 2015, BPNM reported an accumulated loss of $55 million, which increased to $129 million by August 2017.
According to BPNM's current general director Stephen John Ennor, the low global price of nickel, coupled with high taxes and high manufacturing expenditure, the company’s revenue is not large enough to offset expenditures to maintain its operations.
Thus, BPNM was forced to suspend operations for three years from September 2016 to September 2018. However, it will still explore ores sites on an area of 49.7 square kilometres, according to its mining licence.
|Ban Phuc Nickel requesting support to continue operations|