Since 2004, the volume of coal Vietnam has exported has increased by five-fold, reaching $32.535mil tonnes last year. This does not include the illegal export of 10mil tonnes a year.

The Ministry of Planning and Investment in 2006 warned that if Vietnam did not take any measures to limit exports, the very important natural resource would become exhausted, while Vietnam needs to ensure energy safety for the national economy.

Despite the warnings, coal exports in 2007 were very high, representing the increase of another 11% over the previous year.

Bui Xuan Khu, Deputy Minister of Industry and Trade, said that the ministry plans to cut exports by 5mil tonnes compared to last year in order to meet the increased demand in the domestic market. However, the said volume proves to be not enough.

Leaders of the Vietnam Coal and Mineral Industries Group (Vinacomin) also think that Vietnam should export 5mil tonnes a year only in order to get prepared to meet the national economy’s demand, which is expected to skyrocket in the near future.

Last year, the average export price was $32.2/tonne (Quang Ninh port). The export price has soared to $60/tonne now due to the crude oil fever in the last few months. As such, Vietnam lost nearly $1bil due to the price differential.

However, the loss will be bigger if Vietnam has to import coal now. Vinacomin’s officials say that the production cost for every tonne of imported coal is $135, including transport fees. This means that the total sum of money Vietnam has got from coal exports is just enough to buy back half of the volume it exported. With the electricity demand increasing sharply by 17-20% per annum, the moment when Vietnam will need to import coal is not far away.

According to the Ministry of Industry and Trade, in order to meet the electricity demand for the period from now to 2025, Vietnam will need 4,000 MW more every year. As hydropower resources have nearly been fully exploited, and natural gas proves to be limited, Vietnam will have to rely on coal-run thermopower plants.

If the power plants to be built in the time to come use coal to produce half of their designed capacities, Vietnam will need 6mil tonnes of coal every year, so Vietnam will have to spend $800mil a year to import coal (at the current price).

The Ministry of Industry and Trade once forecast that Vietnam would not have to import coal until 2015. However, it is now clear that it will be sooner than this. Several big thermopower plants in the central region and the south have been proposed to be built. The investors of these, including the Electricity of Vietnam, are already seeking coal supplies in foreign countries.

Vinacomin now exploits over 50mil tonnes of coal every year. It is providing 15-20mil tonnes of coal to domestic consumers, while the remaining volume is being exported, mainly to China.

The main sources of coal are the mines in Quang Ninh province in the north. According to Vinacomin, the mines have the total reserves of 10.5bil tonnes.

Vinacomin is making investment in order to exploit coal from the coal mine in the Red River Delta, the biggest one in Vietnam. However, as coal lies deep beneath the ground, it is expected that only 9-10mil tonnes can be exploited every year.

Thời báo kinh tế Sài Gòn - June 2, 2008