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Thach Khe iron super project getting stuck due to lack of capital
The fact that the shareholders of Thach Khe iron super project have been slow in contributing capital has seriously affected the project implementation.
On April 13, the Ministry of Industry and Trade had to gather a special meeting to discuss the restructuring of capital contribution to the Thach Khe Iron Joint Stock Company (TIC), the investor of the Thach Khe iron ore mine in the central province of Ha Tinh.
The meeting was gathered because many shareholders of TIC have not fulfilled their capital contribution commitments, thus slowing down the project implementation.
TIC was set up four years ago, with a chartered capital of 2.4 trillion dong. The company’s main function would be exploiting iron at Thach Khe mine and providing iron ores to serve the domestic demand and for exportation. Besides, TIC would also build and run an ingot steel mill with the initial capacity of two million tons a year. The production scale would be expanded if there are favorable conditions.
TIC has nine main shareholders, including the Vietnam Coal and Mining Industries Group (Vinacomin) which holds 30 percent of stakes, the Ha Tinh Mineral and Trade Corporation (24 percent), the Vietnam Steel Corporation (20 percent), the Vietnam Post and Telecommunication Group VNPT (4 percent), the Bank for Investment and Development of Vietnam (5 percent), Song Da Corporation (5 percent), the Vietnam Shipbuilding Industry Group Vinashion (5 percent), the Binh Minh Import-Export Company (4 percent) and Thang Long Mineral and Metallurgy Company (3 percent).
Of these nine shareholders, Vinashin, which has been facing a crisis and is bogged down in debts, cannot make a capital contribution as promised. Meanwhile, some other shareholders have also “forgotten” their duty of making capital contribution.
In 2010, shareholders did not contribute 1.3 trillion dong worth of capital as committed, while they only contributed 221.5 billion dong, the amount of money they should have paid in 2009.
Meanwhile, in late 2010, TIC signed a contract on drawing up technical design and estimates for the iron exploitation and sifting with the joint name of contractors already. The contract is worth approximately 63 billion dong.
Ho Duc Binh, General Director of TIC, said the fact that shareholders do not contribute capital as per commitments has been seriously affecting the operation of the project.
The TIC’s board of directors decided after the meeting on November 29, 2010 that TIC would send a document to the Ministry of Industry and Trade and the Prime Minister to report the situation and ask for instructions on restructuring the shareholders.
Binh told Thoi Bao Kinh Te Vietnam right after the meeting at the Ministry of Industry and Trade on April 13 that the company now does not have capital to operate, while it cannot borrow money from banks. The tardiness in the project implementation has also made TIC’s debts increase.
Also according to Binh, TIC’s board of directors will have an extraordinary meeting where an announcement will be made that shareholders will have to make capital contribution prior to May 30. In case the shareholders cannot contribute capital as promised, the project will have to call for more capital from existing shareholders or call for investments from new shareholders.
However, TIC and the Ha Tinh provincial People’s Committee still show their strong determination to implement the project as previously scheduled.
“We have injected 700 billion dong in the project, and we cannot stop the project now,” Binh said.
Thach Khe is considered the biggest iron ore mine in South East Asia, which was discovered in 1960. The mine is thought to have a total reserve of 544 million tons.
vietnamnet, TBKTVN
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