Emerging Markets Direct
sharp recovery in the second half for most
commodities.
Exploration activity by the top 40 declined
significantly in 2009. With diminishing
reserve replacement, and a dearth of
exploration, mining companies are all
pondering the same question when and
where will the next world-class mine be
found?
Table 1: Key Financials for Top 40 Mining Companies
2009
2008
Revenue (USD bn)
325
383
(15)
Net Profit (USD bn)
49
66
(26)
Net Profit Margin
15
17
(12)
Return on Equity
12
20
(40)
15
(40)
Adjusted EBITDA Margin
33
39
(15)
Gearing Ratio (x)
17
24
(29)
Return on Capital Employed
% Change
Source: PriceWaterHouse-Coopers, Review of Global Trends in the Mining Industry
1.2
Vietnam Mining Industry Overview
In Vietnam, agriculture is the primary
occupation of the population in Vietnam, but
its primary export industry is mining. Most of
the countrys mineral resources are located
in the northern region, which produces large
amounts of coal and possesses sizable
deposits of phosphates, manganese,
bauxite, chromate, and other metal ores.
Substantial offshore petroleum (oil and gas)
deposits have been discovered in southern
waters, and production is on-going.
According to the Ministry of Industry (MOI),
to realize the objectives set until 2010,
Vietnam must focus on selective spearhead
resources like coal, mineral, electricity, steel,
oil, and gas. These industries to develop
these resources have poured investment into
raising production capacity and updating
technology and equipment, seeking to
sharpen their competitive edge. These
industries are working to take more initiative
in the integration process without fear of the
capital shortage.
Vietnams mining industry will need around
VND900,000 billion (USD56.25 billion) for
development during the 2006-2010 period,
according to the Ministry of Industry (MOI).
This huge capital volume accounts for 23.2%
of the aggregate social investment capital.
Vietnams current dependence on coal for its
energy needs has significantly increased the
demand for coal in recent years. The
dynamically growing demand for electricity
and industrial coal, especially from the
cement and construction material industry,
have partly fueled development in the coal
sector. With limited natural gas resources
and fully exploited hydropower resources,
Vietnam will have to rely on coal-run thermal
power plants in coming years.
The global financial crisis that began in 2008
had moderate effects on the Vietnamese
coal industry. The manufacturing industry
was badly hit and demand for coal was
drastically dented. The economy rebounded
in 2010 and the manufacturing sector has
regained its exponential growth momentum.
The power sector is slated to be the
industrys most dominant consumer for the
2010-2014 period, with coal demand
expected to grow at a CAGR (Compound
Annual Growth Rate) of more than 41%
during the period.
minerals
vietnam
Emerging Markets Direct
Domestic coal production has been
surpassing local demand, and Vietnam has
been exporting large amounts of coal.
However, the limited coal reserves will soon
leave an increasing gap between supply and
demand. As a result, regulators have
proposed importing coal starting in 2012.
The situation will continue to worsen if
authorities overlook new reserve discoveries
and exploitations.
Table
Around 5,000 ore deposits have been
discovered for approximately 70 types of
minerals in Vietnam. In 2008, the country
produced around 1% of the worlds barite,
cement, and tin as well as ranking seventh in
the production of crude petroleum in the Asia
Pacific region.
2:
Types of
Discovered
Metallic Minerals
Mineral
Deposit
Non-Metallic Minerals
Iron
Kaolin
Manganese
Apatite
Chromite
Pyrite
Ilmenite
Graphite
Bauxite
Serpentine
Copper-nickel
Bentonite
Zinc-lead
Barite
Tin and Tungsten
Mineral Water
Gold
Rare Earth Elements
Source: Ministry of Industry
Chart 2: GDP of the Industry and Mining and Quarrying
GDP: Industry (ytd)
GDP: Mining & Quarrying (ytd)
600,000
551,867
500,000
474,695
396,875
VND billion
400,000
300,000
249,127
295,149
138,901
200,000
117,694
123,700
165,310
100,000
31,359
Mar-09
64,934
Jun-09
96,525
39,302
Sep-09
Dec-09
Mar-10
79,613
Jun-10
Sep-10
Source: CEIC
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Emerging Markets Direct
Chart 3: GDP of Mining and Quarrying and Annual Growth
180,000
45%
VND billion
y-o-y Growth
40%
140,000
35%
120,000
30%
100,000
25%
80,000
20%
60,000
15%
40,000
10%
20,000
5%
0%
GDP
160,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: CEIC
1.3
Vietnam Economic Overview
The Vietnam governments long-term
development plan aims to turn Vietnam into
an industrialized country by 2020. According
to a Foresight 2020 report by the
Economist Intelligence Unit (EIU), Vietnam
will be one of the fastest growing economies
in the world by 2020. EIU also predicted
Vietnams GDP annual growth rate would
average 7% for the 2006-2010 period.
Table 3: Forecast for Vietnam
2008
Real GDP growth (% year)
2009
2010
2011
2012
2013
6.3
5.3
6.7
7.0
7.9
6.6
CPI Inflation (%)
23.1
7.0
9.1
8.0
5.8
4.7
Exports of goods (USD bn)
62.7
57.1
69.1
76.7
84.5
93.1
Exports of services (USD bn)
7.0
5.8
6.9
7.9
8.5
9.4
Imports of goods (USD bn)
8.0
6.9
7.3
7.9
8.6
9.3
Imports of services (USD bn)
8.0
6.9
7.3
7.9
8.6
9.3
Current account (USD bn)
-10.8
-7.4
-9.6
-8.6
-8.0
-7.3
Current account balance (% of GDP)
-11.8
-7.7
-9.5
-7.6
-6.3
-5.3
Exchange rate per USD (year average)
16,302
17,065
19,128
19,799
19,962
20,427
External debt total (USD bn)
26.2
32.1
39.8
46.7
53.1
59.0
Government balance (% of GDP)
-1.9
-7.7
-6.4
-5.5
-4.6
-3.9
Population (million)
87.0
88.0
89.0
90.0
90.9
91.8
91.1
97.2
100.9
112.7
127.6
139.2
1,046
1,104
1,134
1,253
1,404
1,516
Nominal GDP (USD bn)
GDP per capita (USD current prices)
Source: Oxford Economics
minerals
vietnam
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