Coal piles up as domestic firms prefer imports

According to statistics from the General Customs Department, as of December 15 Việt Nam had imported a total 13 million tonnes of coal worth US$860 million during the year, more than four times the targeted 3 million tonnes.

Why did coal purchases increase so sharply?

Market observers said global coal prices fell strongly due to a sharp fall in demand caused by the prolonged economic downturn and general switch to less polluting fuel.

But coal production in many countries remains unchanged.

In the event, the prices have dropped by than 10 percent.

In August alone the price in Australia’s Newcastle Port dropped from US$84 per tonne to $74.

In Việt Nam, the price of coal 11A sold by TKV was $69 per tonne while China sold the same variety for $45-$56 exploited from open-cash mine.

Worse still, costs for domestically exploiting coal have also been increasing by 3 or 4 percent per year due to difficult exploitation conditions.

Analysts said domestic prices are high because taxes and charges on coal products have been rising relentlessly in recent years.

A 12 percent natural resource tax is slapped on coal mining, and the rate goes up to 14 percent in case of open-cast mines.

The comparable taxes are 7 percent and 6 percent in Australia and 3 per cent and 7 percent in Indonesia. In China, they range from from zero to 4 percent.

Not surprisingly, many electricity companies have switched from domestic to imported coal.

Since the beginning of this year, many of Electricity of Việt Nam (EVN)’s subsidiaries have sought permission to import coal.

EVN itself plans to import around 10 milion tonnes for its three thermal power plants, namely the 600MW expanded Duyên Hải Project No.3, the 1,200MW Vĩnh Tân Project No.4, and the 3,000MW Duyên Hải Project.

PetroVietnam is seeking coal for five thermal electricity plants with a combined capacity of 6000MW. The company intends to use imported coal for Long Phú 1, Quảng Trạch 1 and Sông Hậu 1 plants.

In February PVN signed an agreement in principle with an Australian company to import around 3 million tonnes a year.

The downside is that, with Việt Nam itself being a large producer of coal, the rising imports mean the domestic coal industry is saddled with increasingly large inventories.

According to the Ministry of Industry, at the end of April the inventory was 11 million tonnes as only three million tonnes were exported.

Experts said the quality of coal is affected severely if left unused for a long time after being mined, making exports even harder.

Source VNS