Nearly 90% of titanium processing factories across the country have suspended operations due to falling titanium prices and high inventories, according to the Vietnam Titanium Association.

The association said prices of titanium products have tumbled 20-50% compared to a year ago and inventories have climbed to 500,000 tons from 300,000 tons last year.

Nguyen Thuong Dat, deputy chairman of the Vietnam Titanium Association, told the Daily on August 19 that export prices of ilmenite and rutile, titanium processed products, have plunged to US$60-100 per ton.

“With those selling prices, enterprises earn no profit after paying charges and production costs. Therefore, nearly 90% of 70 titanium mining and processing plants with a combined output of nearly one million tons per year have stopped operations,” Dat said and added that around 70% of the employees in the sector have lost their jobs.

Most titanium processing facilities are located in the provinces of Binh Thuan, Binh Dinh, Thai Nguyen, Thua Thien-Hue, Quang Nam and Quang Tri as these localities contain most titanium reserves of the country.

Around 50% of the country’s processed titanium products are exported to China and the rest are shipped to Japan, the United States and South Korea.

At an annual conference held in Quy Nhon City last week to review the nation’s titanium sector, industry insiders forecast that the titanium market will not recover until 2015 or 2016.

Nguyen Quoc Hoi, general director of Thai Nguyen-based An Khanh Mineral Joint Stock Company, said the Ministry of Industry and Trade last year approved titanium enterprises to continue outbound sales of their titanium products but falling demand from last year to July this year resulted in high inventories.

What made the situation worse is that enterprises have had to maintain their production as a measure to retain their workers and this is one of the reasons for the high titanium inventories, Hoi said.

Moreover, titanium firms must pay multiple taxes and fees, including a value added tax rate of 10%, resource tax of 16%, export tax of 30%, corporate income tax of 25%, mineral exploitation fee of 5% and environmental fee.

All those charges and taxes are almost equal to the FOB (free-on-board) export prices of titanium, Hoi said.

Vo Quang Hien, general director of Thua Thien Hue Mineral One Member Government Co. Ltd., said as taxes account for 50-60% of titanium production cost, he suggested in his report presented at the conference that relevant ministries should offer tax incentives to help titanium enterprises out of the woods.

Shortcomings of the country’s titanium sector included the heavy reliance on equipment imported from China, small-scale processors, out-of-date and polluting machines, and scattering of titanium ores.

Nguyen Ngoc Thanh, deputy head of the Heavy Industry Department under the Ministry of Industry and Trade, said the country now has total titanium reserves of around 650 million tons.

Currently, there are two plants able to process ilmenite with a total annual output of 20,000 tons, five plants producing slag with combined capacity of 84,000 tons per year, and 11 production chains making zircon and rutile powder.

The country targets an annual output of 60,000 tons of ilmenite, 989,000 tons of titanium slag, 120,000 tons of rutile products, and 194,000 tons of zircon and 240,000 tons of pigment by 2020.

• [Editor:Mango]