HANOI: The newly released coal industry development program by 2020 shows that Vietnam’s demand for coal would be increasing in upcoming years. It is expected that Vietnam would need 86.4 million tons by 2020 and 256 million tons by 2030.
Vietnam estimates that it would need VND96.556 trillion in investment capital by 2030 for the coal industry, or VND19.313 trillion a year.
Nguyen Thanh Son, former director of the Management Board of the Red River Basin Coal Projects belonging to Vinacomin, the biggest coal miner in Vietnam, has expressed concern about the program.
According to Son, following the standards on coal reserves set by the Ministry of Natural Resources and the Environment, which are similar to US standards, the coal reserves in Vietnam are nearly zero. In principle, coal reserves are only approved if the coal beds, if exploited, can bring economic efficiency at the time of approval.
Meanwhile, there is no assessment about economic efficiency of most of the mineral reserves in Vietnam. Therefore, the approval is made based on geological information. Son voiced his concern about plans to spend VND19 trillion a year to maintain and expand the coal industry.
Since 1995, the State has not not invested in the coal mining industry with the state’s money. Vinacomin only receives modest amounts of capital every year from the State, which it mostly spends on healthcare, training and research works.
This means that coal miners will have to seek capital themselves as they have been doing for many years. However, what Son is interested in does not lie in the amount of capital to be spent, but on the efficiency of the investment.
He believes that it would be better not to spend money to expand production, but only focus on maintaining production. The average coal export (FOB) price at the ports in Quang Ninh province is $2.9/MBTU, while the import coal import price (CIF/CFR) is $2.6/MBTU.
The figures showed that domestically exploited coal is more expensive than imports. “This means that domestic exploitation is inefficient,” he concluded. Believing that the problem lies in bad management and smuggling, he said it would be better to focus on tightening control over exploitation and exports rather than expanding the exploitation scale.
