by stuart on July 27, 2011
Vietnam, it seems, is the new frontier.
Rich in largely untapped natural resources and able to benefit from a low cost labor force, Vietnam has enjoyed 10-percent growth rates (although it has also suffered 11 percent inflation rates last year). The country has never been a major metals producer, but that could be about to change.
Blessed with abundant bauxite, estimated in a Reuters article at between 5.6 billion tons and 8.3 billion tons, Vietnam could become the third-largest alumina producer in the world after Guinea and Australia. Not satisfied with being just a raw materials producer, the country has awarded the engineering, procurement and construction contract for two alumina projects in the central highlands to Chalieco, a subsidiary of state-owned Chinese Aluminum Corporation of China (Chinalco). Both plants are expected to produce some 600,000 tons per year when operational, which initially will mostly go for export, but which the government hopes will form the basis for a domestic aluminum industry in the future.
The Mekong Runs Through It
That will be a harder goal to realize. Although blessed with numerous potential hydroelectric power generation sites along the Mekong River, a fierce debate is raging between environmentalists on one side and industrialists & politicians on the other as to the merits of developing what could be up to 12 hydroelectric sites along the Mekong.
The sites are spread along the 3,000-mile length as the river runs from China through four downstream countries of Thailand, Laos and Cambodia before reaching the sea at the Mekong delta in Vietnam. Most of the hydroelectric projects would be in China and along the Thailand/Laos border, created by the Mekong for many hundreds of miles. While Thailand and Vietnam would arguably be the main buyers of power, with Vietnam at the end of the river, they have the most to lose from the loss of silt, lower water levels and damage to fishing stocks that would result. On a local website, river authorities are reported saying hydroelectric plants will cause major harm to Vietnam’s Mekong Delta, which is the home to nearly 20 million people and supplies around 50 percent of rice output, over 70 percent of seafood and 70 percent of the fruit output of Vietnam.
The Far-Reaching Effects
As with hydroelectric plants elsewhere, the environmental impact is often far-reaching and sometimes initially unseen. Specifically, the authorities are concerned that if the plants go ahead, 55 percent of the Mekong River’s main stream length will become a reservoir, which it is feared will destroy the river’s living environment and ecological system. In the process, 50 percent of the alluvial volume of the Mekong (said to be around 165 million tons per year) will be kept by China’s reservoirs, and 25 percent kept by downstream reservoirs, mostly in Laos. Around 2.3 to 2.8 million hectares of agricultural land, mainly in Vietnam and Cambodia, will be affected. The volume of alluvial silt delivered to Vietnam’s Mekong Delta will drop from the current level of 26 million tons a year to just 7 million tons a year. According to research work by Nguyen Huu Thien, an expert from WWF Vietnam, the Mekong Delta will lose from 220,000 to 440,000 tons of migrant fish a year.
The concerns are real, and will create a major hurdle to the exploitation of the Mekong’s hydroelectric potential. However, without cheap hydroelectric power, Vietnam is unlikely to move from being a low-value bauxite producer or medium-value alumina producer to a higher-value aluminum producer – or develop further downstream aluminum processing industrial activities. New thermal coal plants are set to generate the power for alumina production, but modern aluminum smelting only becomes realistic if it is based on hydro or gas-power production.
Exploitation of the Mekong is not wholly within Vietnam’s remit, in spite of the intended protection of the Mekong River Commission, but even left to its own devices, it is questionable whether the country would forgo the many benefits the river brings in the pursuit of cheap power, especially if that power was then simply exported in the form of primary aluminum.
–Stuart Burns