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

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vietnam

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