Vietnam coal exports crash 75pct amid global energy market collapse

By Bui Hong Nhung June 28, 2016 | 02:01 am PT

High prices coupled with plummeting global demand for coal are taking their toll on Vietnam’s coal industry, especially state-owned coal giant Vinacomin, the government's online news portal has reported.

A report from Vinacomin showed that in the first six months of this year, Vinacomin turned out 19.27 million tons of coal, down eight percent against the same period of last year. Exports also fell to 183,000 tons, equivalent to just 26 percent of the 2016 target.

Data from Vietnam Customs said that the country’s total coal export volume slumped by 75 percent on-year to just over 218,000 tons in the first five months of 2016, causing export value to tumble by 75.7 percent to $23 million.

vietnam-coal-exports-crash-75pct-amid-global-energy-market-collapse

Deputy Prime Minister Trinh Dinh Dung visits a Vinacomin coal mine. Photo from the company's website.

At a meeting with Deputy Prime Minister Trinh Dinh Dung in June, leaders of Vinacomin said the company is facing numerous challenges while have yet to find a feasible solution to.

The first is the decline in the global energy market. Many coal mines have suspended output due to high production costs and low prices.

Difficult mining conditions and a 15 percent tax on sales are also pushing up the export prices of Vinacomin’s products, making them unable to compete with foreign rivals.

Leaders of Vinacomin also added that the government has recently allowed some industries to import coal from external sources, so Vinacomin has a higher coal inventory.

In response, Deputy Prime Minister Trinh Dinh Dung advised the company to focus on products with competitive advantages to reduce expenditure and prices.

“The harsh realities at present are forcing the coal industry to put more effort into finding products that meet market demand and take advantage of the company's strengths,” Dung said.

The deputy prime minister also called on authorities to review the tax rates imposed on coal products to help reduce Vietnamese coal prices.

Vinacomin is Vietnam’ largest coal producer and exporter. Last year, the country saw a year-on-year increase of three percent in revenue to reach VND106.8 trillion ($4.8 billion), but its profit fell to VND600 billion ($27 million). This year, the company hopes to reach 110 trillion (nearly $5 billion) in revenue and one trillion in profit ($45 million).