The coal industry is seeking way-outs to create a suitable coal selling price level and prepare a good source of coal for domestic consumption.
Cannot sell cheap coal for good
The Ministry of Finance has allowed the Viet Nam National Coal - Mineral Industries Group (Vinacomin) to revise up selling prices applied to cement, coal and fertiliser producers from the end of September. Particularly, the selling price of cobbles applied to nitrogenous fertiliser producers will increase 30 %, phosphate fertiliser producers 25 %, cement, paper and fertiliser producers 25 %. The selling prices subjected to these producers will be revised up again in the fourth quarter of 2009 to ensure that the selling price will be at most 1 % lower than the exporting rice.
Only the electricity industry continues enjoying preferential coal price which is 38 % lower than the production cost. The price is expected to be adjusted to the market regime in 2010.
According to statistics, production costs of steel, cement, chemical and other industries will be pushed up while selling prices of these commodities cannot be raised correlatively.
Regarding this matter, Mr. Tran Van Hoa, General Director of Vinacomin, said: “In reality, for a long time, selling prices for domestic consumers were too cheap for Vinacomin to accumulate for intensive investment. Not until when the Government decided to adjust the coal price on the basis of market principles does the coal industry have reciprocal capital to borrow money from credit institutions for development investment. At present, it costs hundreds of millions of US dollar to invest in a coal mine with an annual production of 2 million tonnes per year. However, Vinacomin did not have enough money for coal mine development.
Higher selling prices will enable coalminers to take coal at deeper levels. At the same time, coal users also have to renovate technologies and cut fuel costs to use coal more effectively; thus, the market-based coal selling price is a right policy.
Will import coal
According to short-term reports, coal production in Vietnam will fail to meet the demand by 2013 when many thermal power plants are operated. However, the import source and price remained unsolved questions. Recently, large economic groups like Viet Nam National Coal - Mineral Industries Group (Vinacomin), the Electricity of Vietnam (EVN) and the Vietnam National Oil and Gas Group (PetroVietnam) were assigned to invest in thermal power plants and they are actively seeking sources of imported coal.
Mr. Tran Xuan Hoa, General Director of Vinacomin, said: Vinacomin has send around 10 delegations to coal exporting countries to negotiate coal import but no agreement has been reached. At present, all exporting partners forced Vinacomin to contribute capital or purchase their equity to ensure long-term stable supply.
“However, Vinacomin impossibly decides this on its own because the coal importing price will move on the world rate. Besides, Vinacomin also has to negotiate electricity selling prices with EVN. Moreover, investors of thermal power plants will decide on the price and type of coal and then import suitable technology,” Hoa analysed.
To seek coal supply for power plants both EVN and PVN have sent their staffs to foreign countries to negotiate with coal exporters but they did not reach agreement
Vinacomin has proposed the Government to set up a national steering committee on coal import. The Ministry of Industry and Trade will be the line agency and power producers like Vinacomin, TKV, EVN, PetroVietnam and others will join the committee, instead of only Vinacomin.
Although the coal supply for thermal power plants in the country will fall short, Vinacomin will not cut coal export, which currently accounts for 50 % of annual clean coal. Regarding this issue, General Director of Vinacomin gave two explanations.
Firstly, at present, to open a coalmine and operate until it reach 2-4 million tonnes per year, it takes at least five years, with average duration ranging between five and ten years. The production must be continuous while coal cannot be put open-air because its quality will downgrade. Meanwhile, coal producers do not have enough capital to store coal for the future local demand. This activity is out of the capacity of any enterprises and no country in the world has used that way.
Secondly, the Vietnamese coal quality is high. If it is used for coal generation, it can be regarded as wasteful way. At international coal conferences, it is recommended that anthracite coal should not be used for electric generation but used for high-tech industries like chemical or metallurgy industries to create products of higher value.
Mr. Hoa said: “Vietnam still needs to export and import coal. It will import cheap coal for power generation and export high quality coal to increase forex earnings.”
Huong Giang
Vietnamese
