VINACHEM

The shipment of 9,570 tonnes imported from Indonesia arrived at Cat Lai Port in the southern province of Dong Nai and would be used as fuel for thermal power plants in the central and southern regions.

Viet Nam has been a coal exporter for decades, relying on its large coal deposits, but the imports have become necessary as buying imported coal has become cheaper than extracting domestic coal, according to Vinacomin.

Importing low-energy bituminous coal for use in power generators became preferable to using domestic coal, a high-energy anthracite mainly used in chemicals and metallurgy, said Vinacomin's acting deputy director Vu Manh Hung.

"We should sell our high-quality coal and import cheaper coal," Hung said. "Power plants have been advised not to waste anthracite to generate electricity."

Earlier projections had said coal imports would become necessary in 2015, but heavy exports of domestic coal and inadequate policies for stockpiling supplies have pushed that date forward, said Vinacomin general director Le Minh Chuan.

It was also a purely economic decision, Chuan said. The price of coal imports from Indonesia were US$100.60 per tonne while the cost of domestic coal transported from the north to the south had reached $122 per tonne.

"The imports from Indonesia were done on a trial basis to test the strategy of importing larger volume in the future," Chuan said. "Finding supplies is also not easy. Previously, Vinacomin spent a lot of time negotiating with Australian and Russian partners, to no avail. Recently, however, we were able to win the agreement with Indonesia."

Viet Nam was also competing for supplies with more established buyers like Japan, South Korea, India and China, Hung said. "These importers have eaten up most of the available coal from mines in Indonesia and Australia. Viet Nam would be hard-pressed to obtain a large volume of coal from those countries."

"The important thing is to have a strategy and familiar import markets," Chuan added.

To ensure overseas supplies in the future, enterprises would need to buy rights to exploit or to the production of particular mines.

"Local enterprises need good financial conditions to invest in coal mining abroad," said the director of Vinacomin's Red River Energy Co, Nguyen Thanh Son.

China has invested $5.6 billion in Australia for the rights to exploit 30 million tonnes of coal per year, Son said.

"To ensure coal imports to meet domestic demand, Vinacomin and some other groups were working out financing arrangements for importing coal from abroad," Hung said.

Meanwhile, the group was exploring a new mine with a capacity of 1.5-3.5 million tonnes per year, Hung said.

The group also expected the Government to approve the plan on exploring and exploiting the coal basin in the Red River delta. Meanwhile, Vinacomin was co-operating with Hung Yen and Thai Binh provinces in the delta to conduct trial exploitation on small scale, with the target of obtaining coal and providing local jobs.

Deputy Minister of Industry and Trade Nguyen Thanh Bien said the ministry would build a reasonable strategy on coal imports and exports to ensure energy security.

Vinacomin would need $1 billion annually to increase coal production to 48 million tonnes in 2015 – 8 million tonnes higher than the current output – and to 55-70 million tonnes in 2020. Demand was estimated to reach 54 million tonnes in 2015 and 150 million tonnes in 2020.

The group expects to import 10 million tonnes of coal annually this year and next, mostly low-energy bituminous coal for use in power generation. The figure was estimated to reach 100 million tonnes by 2020 to meet the urgent demand for electricity as well as demand of other industries such as steel and cement.