Ministry of Industry and Trade explained why imported coal increased significantly

Representatives of the Ministry of Industry and Trade and TKV join the dialogue.

According to data from the General Department of Customs, by September 15^th, 2016, imported coal reached 10.1 million tons. This figure is 3 times higher than the forecasts of Ministry of Industry and Trade (MOIT) which was announced earlier of this year (only about 3 million tons). The import market is still mainly in Australia, Indonesia, Russia, etc.

In the online dialogue, with the topic "Importing coal and ensuring national energy security" organized by Government’s Electronic portal on October 24^th , Mr. Nguyen Khac Tho, Deputy Director of Energy (Ministry of Industry and Trade) said, the reason is that the domestic coal resources could not meet the demand and imported coal price is much cheaper than domestic coal mining.

Specifically, due to the conditions of mining being increasingly difficult that leads to a big gap in price between domestic and imported coal. Currently, many mines have to dig to a depth of over 300 meters so that workers could mine. Meanwhile, the tax levied on coal in Vietnam is higher than many countries in the region by 5% to 7%.

Not to mention that the coal price in the world has dropped sharply, following the oil price in the first months of the year, making the gap between the domestic and international price. Meanwhile, the existing imported coal duty has been set to 0%, so it is much easier to import coal.

Mr. Nguyen Van Bien, Deputy General Director of Vietnam National Coal- Mineral Industries Holding Corporation Limited (TKV) analysed that, mining conditions plus coal mining mechanization level in many production lines is low so it is a factor causing domestic coal prices to be pushed higher. In fact, while Indonesia mines 3 million tons of land to obtain 1 ton of coal, many units of TKV must mine11 blocks of land, which is more than 4 times.

"Not to mention the exploitation conditions are much harder and economically inefficient. However, TKV has been tasked to expand the scale and increase production in order to ensure national energy security," Mr. Bien said.

Besides, domestic coal is also impacted adversely on tax policy mechanisms such as July 1^st 2016, the environmental resource taxes increased an average of 3 times if granted exploitation charges, as well as the natural resources tax rose more than 10%, higher than the average rate of 7%. However, according to Mr. Tho, coal imports into Vietnam recently is only temporary and will tend to decrease in the near future.

"Currently, the price of imported coal has increased compared to the first 6 months of 2016 and was close to the price of domestic production. I hope that, till the end of 2016, imported coal to Vietnam will not rise further, if any, enterprises are implementing signed contracts. Some customers who used lots of coal have now started to use domestic coal." Mr. Tho said.