Titanium mining and tourism: which option is the priority for sustainable socio-economic development of Binh Thuan province

With the consent of the people, there are often complaints and lawsuits about land, crops, roads, environmental pollution, affecting people's lives. The main reason is that the awareness of titanium mining workers is not high, they often focus on profits, and pay little attention to the environment. Some enterprises do not directly mine but contract with other groups and enterprises to do it, sharing according to the products, so it is easy to do, difficult to abandon, avoiding responsibility for environmental protection. Currently, there is no research project to assess the risks and the level of harm of titanium mining to the environment. State management staff on minerals are lacking and weak, not capable enough to strengthen the inspection and control of mining activities, prevent and promptly handle violations.

Currently, in the province, there are 6 operating refining factories, 2 superfine zircon grinding workshops, 2 refining factories belonging to Saigon - Ham Tan Joint Stock Company and Hop Long Trading & Investment Joint Stock Company.

* Is it true that the strength of titanium is a big challenge for Binh Thuan? What does the province propose to do so that the planning and development of the titanium industry is in harmony with the socio-economic development of the locality?

The project to investigate and evaluate the potential of titanium mineral deposits in the red sand layer currently occupies a large area of the province, concentrated in areas with favorable conditions for attracting investment, making many socio-economic projects of the province such as tourism and wind power unable to be implemented. Investment in deep processing is an issue of concern to the province, but currently, there is still no deep processing plant due to difficulties in technology transfer; processing planning is not reasonable.

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From the difficulties and obstacles mentioned above, we believe that: For the area outside the boundary of the investigation of titanium minerals in the red sand layer, it is necessary to organize an immediate exploration to determine the exploitation areas or not to let the province implement other socio-economic projects. For the area within the boundary of the investigation of titanium minerals in the red sand layer, we propose that the Ministry of Natural Resources and Environment direct the acceleration of progress, and soon have specific conclusions in each area; if the titanium reserves in some places have reserves that need long-term exploitation, we propose that the Prime Minister, ministries and branches have investment policies and mechanisms, and at the same time support funding for the province to invest in developing socio-economic projects in other areas. Where the reserves are low and exploitation is ineffective, we propose that we soon demarcate them specifically and hand them over to the province to implement socio-economic development projects in the area.

Source: Electronic Newspaper Natural Resources and Environment 31

Box C. 4. Some opinions on the titanium potential of Vietnam and Binh Thuan.

Based on the latest data from the US Geological Survey, January 2009 (Mineral Commodity Summaries, USA), there are 11 countries in the world (including Vietnam) with a total reserve of 1,217 million tons of titanium, accounting for approximately 87% of the total global reserves.

According to FOB Australia prices, ilmenite (54% TiO2) in 2004-2006 was 80 USD/ton and 100 USD/ton in 2007-2008; rutile (95% TiO2) price was 500 USD/ton. The average TiO2 price in the past 5 years was 167 USD/ton and the price of titanium metal was 15,800 USD/ton. According to the initial investigation and assessment results of the Department of Geology and Minerals of Vietnam under the Ministry of Natural Resources and Environment, the total reserves of titanium - zircon in the red sand coastal areas of Ninh Thuan, Binh Thuan provinces and the North of Ba Ria - Vung Tau are estimated to be about 400-500 million tons. With a price of 100 USD/ton, the total value is about 40-50 billion USD. If about 2.0 million tons are mined each year (equivalent to Australia's current mining output), the annual revenue will be about 200 million USD. Because it is concentrated in coastal areas, titanium mining will greatly affect the ecological landscape and environment and have negative impacts on the tourism industry.

According to the report of the General Department of Tourism, the revenue of the national tourism industry in 2009 reached about 68,000-70,000 billion VND (equivalent to about 3.6-3.8 billion USD), 18-19 times higher than the revenue if 2.0 million tons of titanium ore were exploited and sold. According to the direction of the Prime Minister, only enterprises will continue to export ilmenite (titanium) ore until the end of 2010. After that, only projects with deep processing will be licensed.

According to the US Mineral Resources Exploration Program, the total output of titanium ore (ilmenite) mined worldwide in 2003 was 5.910 million tons, of which Australia had 2.06 million tons, China 800 thousand tons, Norway 800 thousand tons, Ukraine 670 thousand tons, the US and India each had 500 thousand tons, followed by Vietnam and Brazil each with 180 thousand tons.

Every year, the world needs about 6,250 million tons, with that titanium reserve enough to satisfy the consumption needs of many types for the next few hundred years. Obviously, ilmenite and rutile are not hot, rare minerals in the world. The ilmenite market has been quite stable in both supply and demand worldwide for many years.

31 See http://www.tainguyenmoitruong.com.vn/moi-truong-va-cuoc-song/binh-thuan-thach-thuc-truoc-sa-khoang-titan

According to Associate Professor, Dr. Nguyen Khac Vinh, Dr. Bui Duc Thang, Vietnam Geological Association and other sources.

Box C. 5. Mineral management issues according to the assessment of Binh Dinh Department of Industry and Trade.

Deputy Director of Binh Dinh Department of Industry and Trade Nguyen Van Thang said that with the current fragmented management of resources, sometimes state management agencies have to follow enterprises to manage. Mr. Thang added that only when they know the reserves of the mine can the locality manage it. However, in Binh Dinh, wherever enterprises report, the government goes there, unable to check. They are supposed to supervise and manage, but the department does not know how much they exploit and how much the mine reserves are. We have a regulation that says they will not export raw minerals to the outside, but we do not know how, by which route and at what time, but after being exploited, Vietnamese minerals just "run" to China. Mr. Thang raised the question: "What does the state benefit from exploiting minerals, what does the people benefit from, or is it only the enterprises that benefit?" Natural resources are defined by law as national assets, owned by all the people, and exploitation must bring benefits to the majority of the people. However, not only do they not bring profits, "Mineral mining enterprises sometimes even destroy people's roads," said Dr. Vinh. "Just pay a few dong in resource tax, plus "wink wink" to a few officials, and they naturally exploit the country's resources." "The mining enterprises finish and leave, the remaining social and environmental consequences are taken care of by the government," said Mr. Thang.

Agreeing, Mr. Dao Trong Hung (Vietnam Institute of Science and Technology) raised concerns about the current management of resources by territory and sector. The Coal and Minerals Group (TKV) is licensed by the state to exploit within its territory, while the locality must take care of the consequences. Mr. Hung quoted a ward chairman in Quang Ninh, "any consequences will be reported to the ward, but the ward does not know where the coal ships are."

Source: According to Vietnamnet 32

Box C. 6. Answering voters' questions about titanium mining in Binh Thuan.

Question: I would like to request the Provincial People's Committee to inform us about the progress of the survey and assessment of black sand reserves in the province so far. How many projects have been licensed for exploration and survey? How many projects have been licensed for exploitation? Are there any violations in the exploitation of these project owners? (especially the use of seawater in the process of screening black sand? What is the impact on the environment?). If there are violations, how has the Provincial People's Committee handled them (especially for some project owners who did not comply with the approved impact assessment and environmental protection plan). What is the province's upcoming policy on black sand exploitation? Will the Long Son - Suoi Nuoc Urban Area project be implemented? If so, when will it be implemented? Is the land fund on both sides of Road 706B entangled with black sand? When can it be exploited?

Reply :

Regarding the Project to investigate and evaluate the potential of titanium-zircon mineral deposits in the red sand layer in the province approved by the Ministry of Natural Resources and Environment in Decision No. 864/QD-BTNMT dated May 7, 2009, the implementing unit is the Department of Geology and Minerals of Vietnam, implementation period 2009-2011. The Project has been implemented by the Department of Geology and Minerals of Vietnam since May 2009, currently the field work is being carried out with a volume of about 90%.

Currently, in the province, the Ministry of Natural Resources and Environment has granted 7 exploration licenses to 6 units with a total area of nearly 1,900 hectares.

There are currently 7 areas exploiting titanium in the province, specifically:

- Industrial exploitation has 02 units with an area of 212.2 hectares:

+ Go Dinh area, Tan Hai commune, La Gi and Tan Thanh commune, Ham Thuan Nam district, has an area of 30.2 hectares.

+ Suoi Nhum area, Thuan Quy commune, Ham Thuan Nam and Tien Thanh commune, Phan Thiet, has an area of 182 hectares.

- Exploitation and recovery on tourism projects with 9 units with an area of 374.97 hectares:

+ Son My commune area, Ham Tan district, area of 116 hectares, located in Canh Vien Tourist Area Project.

+ Ke Ga area, Tan Thanh commune, Ham Thuan Nam district, area 36 hectares.

+ Thien Ai area, in Hong Phong and Hoa Thang communes, Bac Binh district, the total area in this area is about 78 hectares, the Provincial People's Committee has granted Exploitation License to 05 units.

+ South Fork Tourist Area Project area, Hoa Thang commune, Bac Binh district, has an area of 121.97 hectares.

32 According to Vietnamnet. http://vietnamnet.vn/chinhtri/201005/Moi-anh-om-mot-it-910005/

+ Project area of Saigon - Ham Tan Tourist Area, La Gi town, area 23 hectares.

During the titanium mining activities of the units, the Department of Natural Resources and Environment regularly coordinates with the Environmental Police, the Provincial Police and local sectors to inspect the mining activities of the units. For mining areas that affect the environment such as Go Dinh area, Tan Hai commune, La Gi town and Tan Thanh commune, Ham Thuan Nam district; Thien Ai area, Hong Phong and Hoa Thang communes, Bac Binh district and South Fork Tourism Project area, Hoa Thang commune, Bac Binh district, the Department of Natural Resources and Environment and local authorities have drawn up records of administrative penalties for 19 cases with a total amount of 239 million (in 2008 and 2009 and up to May 2010), in which the units with the most violations are Do Thanh Mineral Joint Stock Company and Hai Tinh International Mineral Joint Venture Company; At the same time, it is required to fully implement the contents of the approved Environmental Impact Assessment Report and correct violations within the time limit prescribed by law. If not implemented, it is recommended that the competent authority revoke the License granted according to regulations. Currently, this situation has changed more positively.

Titanium exploitation in the coming time in the province must ensure landscape and environmental factors in the area, harmoniously combine economic and social development investment projects in the area according to the law, select units with financial capacity and experience in the mining field, post-mining products must be deeply processed into products of high economic value, and strictly prohibit the transportation of raw ore out of the province.

Long Son - Suoi Nuoc Urban Area Project. Since 2007, the Provincial People's Committee has contracted with consulting units to conduct surveys and plan the Long Son - Suoi Nuoc Urban Area Project. However, according to the direction of the Prime Minister, it is necessary to explore and evaluate titanium mineral reserves to consider whether or not to exploit titanium in this area before implementing the Long Son - Suoi Nuoc Urban Area Project. Up to now, Phu Hiep Company Limited has explored according to the License of the Ministry of Natural Resources and Environment, the Ministry of Natural Resources and Environment will issue a Decision approving the mineral reserves of 2,906,836 tons, in July 2010 the Provincial People's Committee will work with the Ministry of Natural Resources and Environment to decide whether or not to exploit to report to the Prime Minister.

Regarding the land fund on both sides of Road 706B, the Provincial People's Committee has proposed that the Ministry of Natural Resources and Environment not consider investigating, exploring, and exploiting titanium in this area (distance on each side is 500 m).

Source: Official dispatch No. 2957/UBND-TH dated June 28, 2010 of Binh Thuan Provincial People's Committee

Box C. 7. Titanium recovery situation in tourism projects in Binh Thuan.

According to observations by reporters of Saigon Economic Times Online last weekend, at the beach of La Gi town, Binh Thuan province, inside the vast land area running along La Gi beach of the Saigon - Ham Tan tourism project, there appeared large titanium washing machines, nestled among ponds.

On the white sand beach with sparse weeds, it is difficult to recognize that this is the campus of a 200-hectare resort project with a total investment of up to 150 million USD invested by Saigon - Ham Tan Tourism Joint Stock Company. Talking to Saigon Economic Times Online this morning, July 7, Mr. Huynh Giac, Director of the Department of Natural Resources and Environment of Binh Thuan province admitted that there are two large-scale resort projects, Saigon - Ham Tan resort (La Gi town) and Canh Vien resort project (Ham Tan district) that have been exploiting titanium on the project land area for more than a year now.

Mr. Giac said that some large resort projects such as Saigon – Ham Tan or Canh Vien, during the resort construction process, discovered titanium, so the province agreed to allow the investor to exploit the titanium inside the project land to soon implement the tourism project. "Compared to the initially approved project, the Saigon – Ham Tan resort project has been delayed by about 2 years," Mr. Giac said.

The investor of the Canh Vien resort project on an area of 200 hectares in Son My commune, Ham Tan district, has also asked the province for permission to exploit titanium before implementing the construction of a luxury resort and villas with a golf course.

According to Mr. Giac, the capital difficulties in recent years have caused many tourism projects to be delayed. In addition, there are a number of large and small resort projects that have been delayed for many years because investors have used the excuse of exploiting titanium to prolong the time , dig up land, and pollute the environment.

Binh Thuan province is reviewing and if any project is found to be too slow, the land will be reclaimed. Regarding the situation of titanium mining in tourism projects, Mr. Giac said that from the beginning of July this year, the province will no longer allow it to be reclaimed.

Urge investors to soon implement tourism projects.

Although the resort investor is allowed to collect all the titanium, according to Mr. Giac, the benefit to the local budget is not large because the amount of titanium mined is mainly exported raw to China and not processed deeply according to the Government's policy. Currently, the price of one ton of raw titanium exported to China only fluctuates between 50-70 USD.

Mr. Tran The Hung, Deputy Head of the Office of the People's Committee of La Gi Town, Binh Thuan Province, said that all the titanium mined in La Gi Town is exported to China. There are two companies specializing in mining titanium for tourism projects in the town: Tan Quang Cuong Company and Hai Tinh International Company.

Source: Saigon Economic Times Online 33 .

Box C. 8. Titanium export situation in Binh Dinh province.

There are about 10,000 tons of titanium slag worth 5.8 million USD piled up in a warehouse in Binh Dinh that cannot be exported because the tax rate applied to this product is too high, pushing the cost price above the selling price on the world market. This is the situation that Mr. Nguyen Kim Phuong, Director of the Department of Industry and Trade of Binh Dinh, reflected at the conference to review the work of the first 6 months of the year held recently by the Ministry of Industry and Trade. According to Mr. Phuong, the export of titanium slag has been stuck since November last year. The reason is that the tax rate applied to this product by the Ministry of Finance is too high, at 15%, causing the cost of the product to increase, making it difficult to export.

Speaking to Saigon Economic Times Online, Mr. Phuong said that the cost of 1 ton of titanium slag with 85% to 90% TiO 2 content is calculated by businesses to be 550 USD. Meanwhile, the current selling price on the world market is about 580 USD/ton. With a tax rate of 15%, the cost of each ton of titanium slag increases by 87 USD, so if the goods are exported, businesses will have to suffer a loss of 57 USD/ton.

Due to the lack of shipments, 10,000 tons of titanium slag worth about 5.8 million USD of businesses are lying idle in warehouses and yards. Businesses are suffering heavy losses due to stagnant capital while still having to worry about paying interest on loans for investment in production. Currently, 3 factories here have simultaneously stopped operating to cut losses. A representative of the Department of Industry and Trade of Binh Dinh said that the tax rate currently applied by the Ministry of Finance to titanium slag is unreasonable, equating it with titanium ore and titanium concentrate, stemming from an inaccurate understanding of the product .

According to Mr. Phuong, minerals from alluvial mines or original ore mines after being exploited and separated to remove impurities by different methods are called titanium ore and titanium concentrate and have a maximum content of 52% - 54% TiO 2 . Meanwhile, to have titanium slag with a TiO 2 content of 85% or more, it must go through metallurgical technology at different levels, which costs a lot of auxiliary materials, energy, etc. "Therefore, the Ministry of Finance "equating" titanium ore - titanium concentrate with processed products with the same tax rate is really unreasonable" - Mr. Phuong said.

Binh Dinh Department of Industry and Trade and titanium slag production enterprises in the province have repeatedly sent documents to the Government, Ministry of Finance, Ministry of Industry and Trade, requesting to apply export tax rate of titanium slag from 0% to 3%. Ministry of Industry and Trade proposed 5%. However, Ministry of Finance only adjusted the tax rate from 18% to 15%.

According to Mr. Phuong, another unreasonable thing is that while titanium slag products are a commodity with little domestic demand (used to produce welding rods, output of 300 tons/year), and are not prioritized for import, the Ministry of Finance still imposes a 0% import tax.

Source: Saigon Economic Times Online 34

33 Refer to the article on the website of Saigon Economic Times: http://www.thesaigontimes.vn/Home/xahoi/sukien/56766/

34 Refer to the article on the website of Saigon Economic Times: http://www.thesaigontimes.vn/Home/kinhdoanh/xuatnhapkhau/37378/