Reducing Coal Export Volume for Sustainable Energy Development

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In Vietnam, coal industry is one of the most important industries; it has fuelled other industries such as electricity, paper and cement. Along with economic growth, needs for coal are strongly increasing. Many coal-fired power plants are going to be operational, needs for coal will jump.

Vinacomin is focusing on core business lines and ensuring sufficient coal production and decreasing coal export little by little. Vinacomin continues to decrease and will then no longer export coal at all after 2015.

In 2010 it established a procedure and policy system, managed to build a competitive coal market, integrate to regional and international market, and create fairness in coal production and trade activities, no discrimination of economic sectors.

Vinacomin targets 48 to 51 million tonnes in 2015, 55 to 58 million tones in 2020, 58 to 61 million tonnes in 2025 and 200 million tonnes in 2050.

Two main ways to extract coal in coal industry are surface mining and underground mining. Underground mining is very expensive. Surface mining is less expensive but the area of open coal mines becomes smaller and smaller. Forecast shows that the percentage of surface mining will decrease from 32.5 percent now to 12.7 to 15.4 percent in 2015. As a result, underground mining is going to be essential.

With more than 6 billion tonnes explored, only about 2.5 billion tones (of 3.8 billion tones of Quang Ninh mine) can be extracted. With a growth of 12 percent per year, that 2.5 billion tones is enough for the supply only for about the next 30 years. The goal is now to intensify exploration and searching, to efficiently exploit the coal. But the capital needed for this work is not small.

The capital investment for coal industry in 2007-2015 period is calculated at VND84 trillion – too big to coal industry ability. To draw investment, one of the most effective ways is capitalization of coal enterprises, and public issue of shares. For the past years, shares of coal industry companies have attracted several domestic and foreign investors. At Than Nui Beo’s issuance of shares, foreign investors bought all the shares sold. Numerous investors have also bought shares of Than Coc Sau, Cao Son, Deo Nai and Ha Tu.

As energy industry, coal industry, just like electricity, has the full attention of the government. Along with the economic growth, needs for coal increase continuously. After the capitalisation and with the development of the country, coal companies are going to seize several opportunities to grow.

According to the guidance of the Prime Minister, Vinacomin must calculate and reorganise production; and restrict exports unless they are used in a large volume and of high value. The Government also allowed Vinacomin to make gradual rises in coal-selling prices applied to power production so selling prices are lower than production costs to ensure sustainable investment sources for restoring, upgrading and expanding the capacity of existing mines and building new ones to meet the growing demand in the coming years and rationalise energy consumption.

Electricity production must be strictly in compliance with the approved scheme. Vinacomin will consider holding percentages in mechanical companies, even dissolving under-performing ones. However, the group will maintain all industrial explosive companies and focus on improving product quality. Mine construction must be strongly consolidated and highly professionalised. The group will divest in other businesses. On that direction, Vinacomin has rebuilt its production and business plans to 2015, and further to 2020.

Coal export taxes will not be changed in the near term, as the job requires meticulous calculations and studies. The Ministry of Finance will consider exempting import duties for equipment and materials for the installation of alumina plants in Tan Rai bauxite aluminum project in Lam Dong province. Environmental protection loyalties on alumina products will be applied at the lowest level. Export taxes will not be levied on alumina products while the two plants are being commissioned.

Huong Ly

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