Due to the dip in prices worldwide, the government won’t be signing off on new proposals for the survey, extraction, and export of iron ore in the form of pilot projects.
The announcement was made by Prime Minister Phankham Viphavanh at the National Assembly session on Friday while responding to questions posed by members. The latter stated that the mining and export of iron ore ceased to be economically viable because of the sharp dip in the mineral’s market value globally.
The PM said, “If the price of iron ore falls to less than USD 50 per ton 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.”
While the government assesses the viability of ongoing mining operations, the Prime Minister added that if companies are found to violate existing regulations and signed agreements, their licenses would be revoked.
According to the PM, Laos was expected to export 12.63 million tons of iron ore this year, but it has managed to export just 402 tons, which is only 3.18 percent of the target amount. He informed that the government had earlier greenlit several iron ore pilot projects in an attempt to generate more revenue that could positively impact the country’s economy by repaying its foreign debts.
The Ministry of Energy and Mines has now been asked to work alongside relevant sectors and local authorities to resolve challenges associated with existing iron ore pilot projects, and also monitor their operations.
Authorities were also instructed to review the taxes being levied on ongoing iron ore pilot projects, which are currently based on a percentage of the ever-fluctuating market price, rather than a fixed contractual rate. According to the government, the payable taxes need to be considered on a case-by-case basis, as it depends on factors like the location and quality of the iron ore.