Mystery tungsten prices in Vietnam
Wolfram (also known as tungsten) as well as some other precious metal pieces is becoming strategic in economic development and defense of all nations.
Wolfram mines of Vietnam the second largest in the world was put into operation is expected to bring revenue of 250-300 million per year. However, China is a country almost exclusively on this market thanks to rich mineral resources. Therefore, when this country declining exports, many countries have to seek new supplies. This is an opportunity for Vietnam.
The reason that modern industry can be mass produced at high speed and significantly reduced cost compared to a few decades ago largely due to the rare metal. The drill, metal cutting machines, machine parts ... tungsten alloy hardness and high strength, superior heat resistance. Tungsten is also used in the manufacture of light bulbs, cathode-ray tube, vacuum tube fiber, heating equipment, rocket motor nozzles and many other applications of space technology and modern weapons.
As reported by the European Union (EU), colored metals from steel gray to white, very hard and heavy this is one of the raw materials is extremely important. Despite the high strategic value but natural tungsten supply is very limited.
A recent survey of the World Trade Organization show that the US and Europe and Japan consumes about 55% of tungsten, but produce only about 5% of total world supply. Meanwhile, with more than 400 tungsten mines in Jiangxi Province, China accounted for over 60% of world reserves and 76.5% of supply.
With this position, China has held the power to govern and make the world many times as it concerns the supply squeeze. And the US is the biggest worry, as every year to import 40% of China tungsten.
According to the newspaper specializing in global mineral Northernminer, 2003, China began to restrict exports of tungsten ores. By 2007, it imposed a 15% export tax on tungsten products and reduce quotas by 2% per year. Later that year, China also prohibits foreign investment in tungsten. These moves made commodities prices rose nearly 3 times since 2004.
Not only that, it also extends to acquire other mines around the world to increase their monopoly position, even buying low-quality tungsten mines in Africa.
To reduce the dependence from China, the countries with a high demand for tungsten has to find new supplies. EMC Metals, a tungsten mining company in the US, is to reopen the mine in 2013. Springer in NEVADA Earlier, Malaga, Peruvian tungsten manufacturer, has acquired the largest mine in South America. Then, the company rose to dominate (100%) since 2007, when China applied policies reduce exports as prices rise faster. And despite the loss of over $7.6 million in 2009 and about half that number in 2010, Malaga continued tungsten mining investment, according Northernminer.
For Vietnam, the discovery of the Nui Phao mine in Thai Nguyen is also an important milestone contributing to reduce the supply pressure from China.
Nui Phao project spread over an area of over 9,000 m2. Nui Phao has estimated reserves of over 52 million tons of ore containing tungsten. Therefore, it is considered the largest tungsten mines outside China world. Every year, the Company Nui Phao - H.C. Starck (a joint venture between the Company Mining Mineral Processing Nui Phao, of Masan Group Corporation with H.C. Starck) is expected to provide to the market 7% of total world supply. This large output almost doubled the world second offer is Russia.
But more importantly, according to the Masan Group, sales of projects going into operation will be from 250-350 million per year. In particular, account for 50% tungsten revenue. Profit before tax, interest and depreciation (EBITDA) per year will be about 100-175 million dollars (Masan not give specific figures on the profitability of tungsten).
Besides, this tungsten mining project will contribute a large amount of taxes to the state budget over 15 years of operation. According Masan, this figure could reach $1 billion. 430 million including royalties and export taxes of 320 million and USD 290 million corporate income tax.
And the tungsten refinery is being commissioned, the export value of this product will generate greater value added mineral companies in the country. Nui Phao tungsten products, after purification, is qualified to export with a tungsten content of 65%, while the requirements of the government is only 55%. According to Bloomberg, the price of tungsten is at about $400 / MTU (1 MTU equals 10 kilograms of tungsten).
Initially, the high-tech industry has not yet developed in Vietnam, so almost the entire output will be sold after refining the world market, as committed offtake of H.C. Starck. The finished products are different from the Nui Phao Cometals CMC signed contracts to buy previously, represents Masan said.
Whether deployed with positive estimates, but also unable to Masan unforeseen risks. With large scale investment and the loan amount is not small banks (US $200 million from domestic banks and 80 million dollars from foreign banks), the pressure is enormous interest. That is not to mention the risk of demand when the global economy is still recovering slowly. These factors may cause the Nui Phao tungsten prices are not selling as expected Masan.
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