The Lao government has given permission for the Vietnam Chemical Group (Vinachem) to excavate and process potassium in Khammuan province.
Dr Bounthavy Sisouphanthong signs the agreement with Mr Nguyen Dinh Khang, witnessed by Lao President Choummaly Sayasone and Vietnam President Truong Tan Sang and other high-ranking officials from Laos and Vietnam.
According to a Vietnam News report, the Vinachem group will invest US$450 million in the project in Nongbong village, Thakhek district, to extract and process potassium, which is also known as kali salt.
The Vietnamese company plans to excavate potassium in a 10 square kilometre area, with a concession period of 20 years which can be extended for another five years.
The agreement was signed in Vientiane on Thursday between Deputy Minister of Planning and Investment Dr Bounthavy Sisouphanthong on behalf of the Lao government and Vinachem General Director Nguyen Dinh Khang.
The signing was witnessed by Lao President Choummaly Sayasone and his Vietnamese counterpart Truong Tan Sang and other high-ranking government officials from both sides.
The agreement was signed during an official goodwill visit to Laos by the Vietnamese president, who was in the country from February 9-11 for activities aimed at strengthening the longstanding cooperative relationship, friendship and special solidarity between Laos and Vietnam.
Under the agreement, the Lao government also granted the Vietnamese company permission to conduct a survey on a 196 square kilometre site for potential future potassium excavation.
The Vietnamese media reported that Vinachem will build a factory to process the potassium on site in Thakhek district. The plant will have the capacity to process 320,000 tonnes of potassium per year.
Director General of the Mining Department of the Ministry of Energy and Mines, Dr Simone Phichith, told the Vientiane Times on Friday that the US$450 million project will supply potassium for domestic consumption and also for export.
He said the factory should take two years to build, after which extraction operations will begin. The project is expected to contribute to the local economy as well as provide potassium for the Vietnam market.
Mining is one of the main income earners in Laos and attracts the second largest investment after power generation.
According to a report from the Ministry of Planning and Investment, the government approved US$3.1 billion worth of investments in the mining sector in the decade from 2000 to 2010.
As of April 2011, the government had granted approval for 152 mining companies to operate 256 mining concessions across the country.
One of the major miners in Laos is the Sepon Gold and Copper Mine, which operates in the central province of Savannakhet. Another large mining operation is the Phu Bia project in Vientiane province, which exports gold and copper concentrate.
Vietnam is one of the largest foreign investors in Laos, with 224 investment projects worth US$3.57 billion. Vietnamese investors focus mainly on the mining, electricity, agriculture and service sectors in Laos.
