(VNS) Viet Nam Coal and Mineral Industrial Group (Vinacomin) needs capital to develop new coal mines and increase output, but its current problems include high inventory, exports and sources of capital. Nguyen Van Bien, Vinacomin's deputy general director, told Vietnam News Agency about those issues.
|Nguyen Van Bien
How were production and business of Vinacomin in the first 10 months of this year? How about production and business for this whole year?
Production of coal for this year was difficult, and this affected the income of workers in the group.
Profits fell due to a sharp reduction in the world coal price and the fact that consumption dropped by 15 per cent against the same period last year.
The group expected domestic demand for coal to be used for electricity, paper, cement and fertiliser to decrease by 8 million tonnes to 24 million tonnes for this year, despite an initial plan for 32 million tonnes.
This reduction has greatly affected the production and business of the coal industry. Despite the economic downturn, large customers did not expect such a bad economic situation.
To deal with the situation and get capital for production and development, the State approved an increase in the price for coal for electricity from September 15 and cut the export tax rate from 20 per cent to 10 per cent to help the industry get capital.
Since the end of October, coal exports have increased to 1.3 million tonnes in comparison with the rate of 300,000 tonnes in July when the tax stood at 20 per cent. The industry expected exports to surge to 1.8 million tonnes this month.
In the first 10 months, the group sold 30.8 million tonnes of coal including domestic consumption and exports. To reach total consumption of 39 million tonnes for this whole year, the group planned to sell 8 million tonnes in total for the last two months of this year.
The group has continued to develop new coal mines and expand existing mines to increase output in the coming years. Therefore, it needs enough capital for those activities.
How much capital does the group need to achieve these goals? And what will the group do to reach its targets for production and business in the future?
The coal industry needs VND65-70 trillion (US$3-3.5 billion) in capital for the 2011-15 period, or VND17-18 trillion each year. The industry must possess at least VND5.5 trillion and can call on investors for the remaining capital.
The Government permitted the industry to increase coal prices under market rules so that coal could be sold at lower prices than production costs, leaving capital to invest in development.
Additionally, the group would continue reducing production costs to increase consumption of coal and keep production stable.
What are the group's production and business plans for 2013?
Next year, production for large consumers will not experience fast development.
The consumption of coal next year is expected to increase 10 per cent against this year, mainly for new thermo electric plants. Total consumption will reach 43 million tonnes of coal, including 27 million tonnes for the domestic market and 16 million for exports.
The group will also calculate specific supply and demand for coal by 2015 in a development plan for the coal industry based on the current economic situation, geared towards 2020 and looking forward to 2030.
What is the group's current inventory of coal?
At present, the inventory has been reduced by 1 million tonnes of coal in comparison with the rate three months ago. The group now has inventory of 8.5 million tonnes of coal, including 6 million tonnes of processed coal.
If the industry sells 8 million tonnes in September and December, as it expects to, it will end the year with an inventory of 7.5-8 million tonnes due to increasing demand from thermo electric plants.
Given the difficulties in the economy, this inventory rate is suitable to ensure stable production. — VNS