Vietnam’s overexploitation of natural resources has dried up oil wells and overtaxed coal reserves; economists are urging the Government to stop exporting natural resources before local supplies run out.

Developed countries understand that stable energy supplies, including crude oil, gas and coal are of vital importance. That is why powerful economies integrate energy resources into their diplomatic policies. Recently, the Japanese Government decided to trade official development assistance (ODA) for the right to exploit and process valuable and rare natural resources (oil. uranium, nickel and cobalt) in developing countries.

The Japanese Government’s tactics are attractive in the short-term, but the long-term consequences are worth consideration. Vietnam is not rich in natural resources and crude oil, coal, titanium and chrome, just to name a few, have become exhausted due to over-exploitation for massive exports. A substantial nickel mine in Ban Phuc, Son La province will become operational early next year and output nearly 200,000 tonnes of ore a year for export.

Economists and government officials have many times proposed the gradual reduction and eventual stop of raw material exports, thereby retaining valuable materials for local production.

The over-exploitation of natural resources has had a dramatically adverse effect on the environment and raw material exports are too-low profit to justify all the negatives.

Meanwhile, as the national economy matures and material’s demands increase, Vietnam will soon face shortages, experts warn.

Timber exploitation in the 1980s and 90s has destroyed forests. So when Vietnam’s wood furniture industry needs materials, Vietnam will soon have to spend several hundred million dollars a year on imports.

The energy sector is the same. Millions of tonnes of coal are exported to China by the Vietnam Coal and Mineral Industries Group (Vinacomin) every year, while Electricity of Vietnam has to spend hundreds of millions of dollars on electricity from China.

Vietnam is, as of now, a major exporter of crude oil and coal, but it faces the very real possibility of becoming a major importer of crude oil and coal as supplies dwindle further; and without the same export output to cover the cost. It is estimated that once operational, Vietnam’s four oil refineries currently under construction, will need 24mil tones of crude each year. Consequently, local oil wells are drying up and this will force Vietnam to import the material to keep them operational.

Vietnam will also become an importer of coal, probably earlier than the Ministry of Industry and Trade’s 2015 forecast. Vinacomin has announced that it will not guarantee enough coal for power plants in the south, which has forced Electricity of Vietnam to seek overseas supply sources.

The crude oil price has hit the $100/barrel threshold, which means supplies have become scarcer while demand keeps going up. It is critical that the Vietnamese Government reconsiders its resource export policies.

Source: Saigon Economic Times.