Vinacomin Coal Industry Facing Several Difficulties Increasing export taxes, domestic consumer prices of coal well below production costs, and difficulties during the rainy season have all become obstacles that the coal industry will have to suffer in the last second half of 2013. Deputy General Director of the Vietnam National Coal and Mineral Industries Holding Corporation (Vinacomin) shared that in the first six months of the year, coal production has reached 21.5 million tonnes, 50 percent of the annual plan. However, the turnover was only VND47.62 trillion, over 45 percent of the plan. The reason is that coal prices for electricity, which was expected to increase from 1stJanuary, 2013 but officially increased from 20th April 2013, rose more slowly than plan. The first difficulty is that the price of coal for power increases slowly. Vinacomin would miss VND1,500 billion compared with the plan and may face deficit of VND1,800 if the price of coal for electricity had increased over time. Consumption situation and coal prices and a number of minerals continue to face difficulties because currently supply is greater than demand. Therefore, Vinacomin hopes that coal price will approach the market and stop compensating for electricity’s price. On the other hand, current export coal prices are at low level. After excluding taxes, the price is just enough to cover costs and unprofitable. According to Vinacomin, after July 7, coal export tax will be adjusted to the new level of 13 percent instead of 10 percent as at present, which would make the production of many kinds of export coal stop due to lack of interest. Preliminary report on the first six months of Vinacomin showed that if the tax rate of 10 percent per month is kept, exports can reach 1.2 to 1.3 million tonnes. However, when this tax rate is lifted up to 13 percent, export is expected to reach only 400-500 tonnes per month. Along with the tax burden, the cost of producing coal also exerts great influence to the criteria of itss revenue. Vinacomin estimates that, over the past 15 years, the cost per year of coal production has increased by 4-5 percent due to increasingly deep exploit and other inputs such as high taxes, environment fees, raw materials. Therefore, the ability to balance finance and investment to increase production to meet demand for coal after 2015 (reaching 55 million tonnes) is very unlikely. Increased costs and decreased revenues have made it difficult to ensure the income of employees of Vinacomin. In the first six months, income of employees in the coal industry has decreased by 5 percent compared with 2012. The leaders said they will continue to implement measures to tighten expenses, operate coal production and consumption between units reasonably, and control tightly over the quality of coal and delivery schedule for stable production. June and the third quarter is the peak time of the rainy season which will exert great influence on organisation and administration of mining operation and coal production of Vinacomin’s units. The biggest risk of the coal and mineral industry in the rainy season is high pressure between furnace and underground mining plant and landslide for open pit mining. In rainy season, geology changes, dowel hole regularly faces water outcrop and low compression which lead to slowdown in oven speed. Generally, mining productivity of the whole group will be seriously affected by the rate of pit mining rate, which currently accounts for over 50 percent. To minimise the damage caused by the storm, from the beginning of the year, the Vinacomin has established a Steering Committee, directed the establishment of the Commanding Board to prevent flood, assigned specific tasks for members, and actively implemented flood prevention works.
Posted on: Thu, 18 Jul 2013 06:27:38 +0000
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