PM Phankham Viphavanh

Govt suspends new iron ore pilot projects

The government will no longer accept new proposals for the survey, extraction and export of iron ore in the form of pilot projects, due to the falling price of the commodity on the world market.
Prime Minister Phankham Viphavanh informed the National Assembly of the government’s decision when responding to members’ questions on Friday.
Assembly members pointed out that the mining and export of iron ore was no longer economically viable because of the sharp drop in the value of the mineral on the world market.
The premier assured them that “if the price of iron ore falls to less than US$50 per tonne as it was in 2015-2016, the government will completely suspend the export of this ore.”
“In addition, the government will encourage the private sector to build factories to process iron ore when the price rises again.”
As the government reviews the viability of existing mining operations, the prime minister warned that companies that breach regulations and agreements signed with the government will have their licences revoked.
Mr Phankham said Laos had planned to export about 12.63 million tonnes of iron ore, but to date only 402 tonnes had been exported, equalling only 3.18 percent of the target amount.
He told the National Assembly that the government had originally approved iron ore pilot projects in a bid to source more revenue amid the current economic downturn.
The government has been unable to amass the planned amount of revenue partly because of the Covid-19 pandemic, which has had a severe impact on the economy, especially affecting tourism and foreign investment, which are among Laos’ key income earners.
The mining and export of iron ore is part of the national agenda aimed at resolving the government’s economic and financial difficulties.
Mr Phankham said the income generated from iron ore mining would help the government to reduce the budget deficit and repay some of the debts owed to foreign countries, thereby preventing the country from being dragged into default.
To address all the challenges involved in existing iron ore pilot projects, the Ministry of Energy and Mines has been instructed to collaborate with the sectors concerned and local authorities to monitor the operation of the projects in question.
Authorities have reviewed the amount of taxes payable on iron ore pilot projects, which is currently based on a percentage of the market price (which fluctuates), rather than a fixed contract rate.
They say that the taxes paid should be considered on a case-by-case basis, depending on the location and quality of the iron ore.

By Somsack Pongkhao
 (Latest Update December 12, 2022)