Another million-dollar-loss-making project resurfaced

The Hanoitimes – The potash salt mine project in Laos became the 5th loss-making project of Vinachem and the 13th projects of Ministry of Industry & Trade sustaining loss of hundreds of millions of dollars.

"Another loss-making project has resurfaced in the name of potash salt mine project in Laos," said the Vice Minister of Industry & Trade Do Thang Hai at the Vietnam National Chemical Group (Vinachem)'s year-end meeting on January 19 to prepare its targets for 2018.

Along with the potash salt mine project, Vinachem currently has to deal with other 4 projects sustaining loss of millions of dollars, namely Ha Bac Nitrogenous Fertilizer and Chemical, DAP-Vinachem, DAP No. 2 – Vinachem and Ninh Bình Nitrogenous Fertilizer and Chemical.

Despite Vinachem's 20 member companies recorded profit of VND2.16 trillion (US$ 94 million), but due to VND2.11 trillion (US$92 million) losses incurred from 4 projects above, total revenue of the group is estimated at VND47 billion (US$2 million).

At present, the Prime Minister has approved Vinachem's restructuring plan in period 2017 – 2020, which should be the basis for the group to continue its effort in reforming its administration and financial management, urged Hai.

From now on, Vinachem will scale down its business lines to producing and trading basic chemicals; exploiting and processing minerals as raw materials for fertilizer and chemical production; producing and trading pesticides and fertilizers containing phosphorus.

After completing the restructuring and divestment plan, it is expected that Vinachem will increase its chartered capital to VND20 trillion (US$878 million).  The chemical group plans to start its equitization process in period 2018 – 2019, for which the government will hold 50% – 65% of its chartered capital. In the first half of 2017, Vinachem recorded revenue of nearly VND21 trillion (US$ 922 million), which is equivalent to last year's revenue and sustaining loss of VND192.7 billion (US$8.5 million). Meanwhile, in 2016, Vinachem had revenue of approx. VND39 trillion (US$1.7 billion), but still sustained loss of nearly VND1.3 trillion (US$57 million).

The potash salt mine project started construction on September 2015 with Vinachem chosen as investor. It is expected to be completed in 5 years and process 320,000 tonnes of salt per year.

Previously on February 2012, Vinachem signed a 25-year concession agreement with Laos to mine sale across an area of 1,000 hectares.

The project has a total investment of US$522 million, in which US105 million comes from the investor itself and the remaining from Vietnam's commercial banks, including VDB (US$113 million), BIDV (US$161 million) and VietinBank (US$143 million).

The salt mine project is a key part of a master plan to develop Vietnam's chemical industry, aiming to ease both Vietnam and Laos' reliance on imported potash fertilizers.