SICMiningMachinesgains ground at Vietnam Market
On July 30 Donetsk Region State Administration hosted CEO’s of SIC Mining Machines (heavy engineering holding owned by SCM of Rinat Akhmetov) and Vinacomin Vietnam National Coaland Mineral Group. At the meeting the companies signed Memorandum of Cooperation.
The companies are already bound with contractual obligations since May 2012. SIC Mining Machines and Vinacomin signed the contract for construction of two vertical mine shaft at Nui Beo Mine (Quang Ninh province) on the turnkey bases. SIC Mining Machines will supply the new face with equipment tailored to mining and geological conditions of the region. According to the provisions of the contract the Ukrainian company shall complete the construction within 20 month from the date of contract signing. Luganskpodzemstroy was chosen to provide construction activities on the bases of construction contract as it has 20 years of experience in coal mine construction at Southeast Asia by now. National Mining University of Dnepropetrovsk was agreed to provide research and scientific consultancy.
SIC Mining Machines considersan agreement with Vinacomin to be a milestone for the company business in the recent year. In the framework of five-year development strategy the company owned by Rinat Akhmetov is focused on increasing the export share up to 45% comparing to 16% of the previous year. Thus cooperation with Vietnammining company is a matter of great importance for SIC Mining Machinesexport strategy.
Vietnam economy is currently boosting and mining industry is not an exception. The government enhances cooperation with international partners and this has positive effects. Following the results of 2012 the amount of direct inward investments to Vietnam economy increased by 4.7% and currently comes up to USD 16.3 bln. According to the statistics provided by Ministry of Planning and Investment for the last fifteen years Vietnam government managed to raise over USD 50 bln. from 70 countries. About six thousands of investment projects are either accomplished by now or currently are in progress: over 50% of the projects amounted to USD 26 bln. are already finalized.
Long-term program of mining industry development is adopted by the government. according to Vietnam mining plan domestic output growth is supposed up to 55 mio t/y by 2015 and over 75 mio t/y by 2020. The program forecasts expect output growth over 110 mio t/y by 2025 and over 120 mio t/y by 2030. The major coal mining province is Quang Ninh which covers 90% of total Vietnam coal production and the last year brought over 40 mio tones of “black gold”. The Vinacominannual output rate target is 75 mio tons to be reached in the next four years.
Considering this information the Memorandum signed in July between SIC Mining Machines and Vinacomin Corporation will allow significant improvement ofextraction volumes. “Wecarry outcomprehensive projects starting from shaft construction up to longwall equipment installation and maintenance. It is not a secret that Quang Ninh is a high-potential mining provinceto be provided with powered mining equipment, which will allowto increase output and to improve miners’ safety,” Yevgeniy Romashchin, General Director of SIC Mining Machines commented upon Memorandum signing.
Vietnam experts estimated that specific production rate of coal mines equipped with powered mining machines in 2010 could hardly reach 5%. By contrast according to Dongiprouglemash Research Institute the similar figure in Ukraine for 2013 exceeded 72%. Such a low rate is caused not by lack of investor’s interest inpurchasing new equipment, but hard geological conditions.
“We hope that our know-how in powered coal mining at thin seams and pitching seam using plough, together with our experience of cooperation with design institutes will be a solid basis to bring ambitious plans of our Vietnam colleagues into life,” Yevgeniy Romashchin, General Director of SIC Mining Machines highlighted at the meeting with representatives of Vietnam Corporation.
Year ago while signing the contract for Pham Dyc Hiem vertical mine shafts construction, representative of Vinacomin said: «Wearegladto come into partnership with Mining Machines Holding. The reason we have chosen the Ukrainian company is that it provides variety of advantages, namely successful experience, proven technologies, scientific consultancy and reliable equipment.” Signing the Memorandum with SIC Mining Machines shows that Vietnam company was satisfied with actual performance of Ukrainian heavy engineering holding.
SIC Mining Machines doesn’t report amount of the contact for vertical mining shafts construction in Vietnam. As estimated by Independent Trade Union of Miners mine construction in Ukraine on turnkey basis may cost from USD 1 bln. to USD 5 bln. But the Holding owned by Mr. Akhmetov is going to expand scope of export activities which is not limited to single vertical shaftsconstruction.
The boost of coal mining activity in Vietnam requires even more mining equipment manufactured at SIC Mining Machines production sites within Ukraine. Besides, the Holding will develop maintenance services for Vietnam partners. After-sales services and repair of mining equipment is the same major priority as export sales. By 2012 the company is planning to increase revenue form after-sales services share up to 30% of the total amount.
This year under conditions of the recession in core consuming areas of mining equipment (following the Ministry of Energy and Coal Industry of Ukraine for the 6 month of 2013 production output decreased by 6.7% comparing to the period since January till June 2012 which amounted to 40.5 mio tones), Holding management plans to maintain incomes stable. Contract with Vietnam Company will make it possible to fulfill the initial target. And the Memorandum of cooperation signed with Vinacomin specify the target set by SIC Mining Machines namely to increase annual turnover to UAH 5.4 bln (USD 675 mio) during the next five years.