Market observers said global coal prices fell strongly due to a sharp fall in demand caused by the prolonged economic downturn and general switch to less polluting fuel.
But coal production in many countries remains unchanged.
In the event, the prices have dropped by than 10 percent.
In August alone the price in Australia’s Newcastle Port dropped from USD 84 per ton to USD 74.
Photo for illustration. Source: viettimes.net.vn
In Vietnam, the price of coal 11A sold by TKV was USD 69 per ton while China sold the same variety for USD 45-56 exploited from open-cash mine.
Worse still, costs for domestically exploiting coal have also been increasing by 3 or 4 percent per year due to difficult exploitation conditions.
Analysts said domestic prices are high because taxes and charges on coal products have been rising relentlessly in recent years.
A 12 percent natural resource tax is slapped on coal mining, and the rate goes up to 14 percent in case of open-cast mines.
The comparable taxes are 7 percent and 6 per cent in Australia and 3 percent and 7 percent in Indonesia. In China, they range from from zero to 4 percent.
Not surprisingly, many electricity companies have switched from domestic to imported coal.
Since the beginning of this year, many of Electricity of Vietnam (EVN)’s subsidiaries have sought permission to import coal.
EVN itself plans to import around 10 million tons for its three thermal power plants, namely the 600MW expanded Duyen Hai Project No.3, the 1,200MW Vinh Tan Project No.4, and the 3,000MW Duyen Hai Project.
PetroVietnam is seeking coal for five thermal electricity plants with a combined capacity of 6000MW. The company intends to use imported coal for Long Phu 1, Quang Trach 1 and Song Hau 1 plants.
In February, PVN signed an agreement in principle with an Australian company to import around 3 million tons a year.
The downside is that, with Vietnam itself being a large producer of coal, the rising imports mean the domestic coal industry is saddled with increasingly large inventories.
According to the Ministry of Industry, at the end of April the inventory was 11 million tons as only three million tons were exported.
Experts said the quality of coal is affected severely if left unused for a long time after being mined, making exports even harder.
Source: VNA