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Mystery remains as to 500,000 tons of alum in Vietnam’s bonded warehouse

Tuesday, December 13, 2016, 15:10 GMT+7
Mystery remains as to 500,000 tons of alum in Vietnam’s bonded warehouse
The construction site of the factory where the alum is said to be used as raw materials is seen in Vung Tau City, located in southern Vietnam.

Tuoi Tre (Youth) newspaper has recently visited the bonded warehouse where the Wall Street Journal said 500,000 metric tons of aluminum shipped from Mexico is being stored, finding the stockpile under tight security for unclear reasons.

In its December 1 report, the WJS said the huge stockpile of aluminum extrusion had been trucked out of the Mexican city of San José Iturbide and shipped to “a factory and waterfront complex” in the southern coastal Vietnamese city of Vung Tau.

The metal stockpile has been traced to Liu Zhongtian, chairman of aluminum giant China Zhongwang Holdings, one of China’s richest men.

With Mexico-Vietnam rarely used as a trade route for aluminum in recent years, the U.S. newspaper alleged that the unusual business move may have something to do with hiding the real origin of the metal.

According to the journal, exports of Chinese aluminum extrusion to the U.S. are subject to antidumping tariffs as high as 374 percent, compared with those of about five percent on Vietnamese aluminum extrusion products.

Having the metal first sent to Mexico and later to Vietnam would ‘wash away’ its Chinese origin, helping the exporter avoid the stiff antidumping tariffs imposed by the U.S.

Tuoi Tre has found that the Vung Tau facility where the alum is stored, as mentioned in the WJS report, is a bonded warehouse owned by the Thanh Chi JSC, located in the Phu My 1 Industrial Park in Ba Ria-Vung Tau Province.

The alum is covered under these black tarps at the bonded warehouse.

A Thanh Chi Co. executive confirmed to Tuoi Tre that the goods were sent to the warehouse more than a month ago, but refused to disclose the exact amount, saying only that “there are a few thousand containers of them.”

A bonded warehouse is a customs-controlled storage for the retention of imported/exported goods until the import duty owed is paid or export paperwork is done.

Tran Van Danh, head of the Ba Ria-Vung Tau customs department, said the alum stockpile belongs to Global Vietnam Aluminum Co., based in another industrial park in Vung Tau.

According to the WJS, one of the owners of Global Vietnam Aluminum Co. is Jacky Cheung, son of Zhongtian.

The newspaper, to complicate matters more, also cited sources as saying that Cheung is a former owner of Aluminicaste Fundición de México, a Mexican company that oversaw the Mexican aluminum stockpile before its shipment to Vietnam.

Domestic use or re-export?

According to the Ba Ria-Vung Tau customs, Global Vietnam Aluminum Co. is developing a shaped aluminum factory with a capacity of 200,000 metric tons per annum in the province.

The US$250 million project is a joint venture between Cheung and Wang Tong, both Chinese-Australian businessmen.

The project has obtained a license with a term of 37 years from 2011, with construction being sped up.

The construction site of the Thanh Chi Co. factory

It is unclear if the large stockpile of aluminum will be used as raw materials for the upcoming factory or re-exported elsewhere.

For that reason, Danh, the province’s customs department head, said no customs inspection was launched of the stockpile at the bonded warehouse as the importer has yet to carry out procedures to import it for use or re-export.

Danh said the aluminum volume is more likely to be used as raw materials for the new factory, for Global Vietnam Aluminum Co. has not had any export shipment so far.

In the meantime, an official in charge of certificates of origin with the Vietnam Chamber of Commerce and Industry said the aluminum may only be temporarily stockpiled in Vietnam to facilitate an origin-hiding plot.

According to the official, a business may clear customs for the metal to import and use it as raw materials, but the metal will then “pass a few slight production stages” to get the Vietnamese-origin status.

Finally, the alum, yet in the final product form, will be exported with the Vietnamese origin to enjoy tax incentives or avoid antidumping tariffs elsewhere.

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