HÀ NỘI — The domestic coal sector is going through a tough time owing to serious competition from cheap imported coal, the Ministry of Industry and Trade (MoIT) has said.

This had significantly affected the sector’s production and business, the ministry said, adding that companies were trying hard to maintain production, retain employees and maintain labourers’ incomes.

To reduce the gap between production costs and selling prices, the Việt Nam National Coal and Mineral Group (Vinacomin) promulgated Decision No 3005/QĐ-TKV on December 23, 2016, increasing the selling price of domestic coal by 3 per cent to 10.7 per cent, depending on the kind of coal. However, no units have signed coal purchasing contracts with Vinacomin so far this year.

Last month, the production of clean coal was estimated at 3.2 million tonnes, a 16.4 per cent year-on-year increase. In the first two months of 2017, coal production touched 5.9 million tonnes, which is a 6.3 per cent drop compared to the same period last year.

The MoIT said the sector should focus on maximising coal and minerals production and use, especially of those products that have high demand, such as coal lump and high-quality coal dust, and ensure that there is sufficient coal for electricity production.

Lâm Đồng Aluminum-Bauxite Complex has to maximise the use of technology and reduce production cost to make profits, but without compromising on environmental safeguards. Nhân Cơ Aluminium Company should also aim for high production, the ministry said.

The MoIT has also asked the coal sector to manufacture more mining equipment and improve co-operation with foreign countries so as to get access to better technologies.

Lâm Đồng Aluminum-Bauxite Complex reported losses

An inspection undertaken last week revealed that the Lâm Đồng Aluminum-Bauxite Complex invested by Vinacomin incurred a loss of nearly VNĐ3.7 trillion (US$162 million) following three years of operation.

According to the online vnexpress.net newspaper, loss from production was VNĐ2.52 trillion, accounting for 70 per cent, and the remaining was due to fluctuation in foreign exchange rates.

The project was expected to incur a loss in its first initial phase. However, the eventual loss was eight times higher than the estimated figure.

In 2014, Vinacomin estimated the loss would be VNĐ460 billion in the first three years of operation and VNĐ870 billion in the subsequent five years.

Vinacomin was, however, optimistic that the loss of several hundred billions would be small in comparison with expected turnover of VNĐ4 trillion per year, believing that the project could give its total investment back within 13 years.

Inspection results showed that the loss was incurred due to prolonged investment time causing additional spending. In addition, the project came into operation in 2013 when the price of aluminium in the world market had sharply decreased, together with increasing natural resources and environment taxes.

Initial investment for the project in 2006 was VNĐ7.7 trillion. The project was initally slated to be finished in 2009. The complex was planned to produce 600,000 tonnes of alumina per year, which would increase to 1.2 million tonnes by 2015.

However, following four adjustments, this figure surged to VNĐ15.4 trillion and the deadline was pushed back to 2013. In 2014, Vinacomin completed the main project and started building support construction, including a red mud reservoir.

The project is expected to recoup the loss this year as aluminium price is on an upward trend, while production costs have reduced following stable operation.

The Nhân Cơ Aluminum Factory project, another Vinacomin project, has designed productivity of 650,000 tonnes of aluminium per year.

Costs increased from VNĐ3.2 trillion to VNĐ16.8 trillion and the completion date was changed to 2014 because the factory’s capacity increased from 300,000 to 650,000 tonnes per year.

The project has begun pilot operation and is scheduled to come into full operation within the first quarter. — VNS