Vietnam Coal Industry Seeking Solutions to Overcome Difficulties

The Viet Nam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin) had to face many challenges with a sharp fall in demand for energy in general and coal in particular.

Due to the impacts of the economic downturn, in the first 9 months of 2012, the Viet Nam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin) had to face many challenges with a sharp fall in demand for energy in general and coal in particular. Besides, coal consumption reduction in the domestic market and coal exports have also faced fierce competition from other countries, resulting in sharp price declines.Vinacomin are facing hard tasks to complete the 2012 business plan.

Solutions for coal output

In the first 9 months of 2012, Vinacomin had produced over 33.2 million tonnes of rough coal, up to 68 percent of the yearly plan. Total revenue of the first 9 months reached VND 60,000 trillion; the average income of workers around 7 million VND/person/month.

Under these circumstances, Vinacomin has simultaneously deployed multiple solutions of flexibly adjusted production to meet consumption demands and reducing inventories. Additionally, Prime Minister Nguyen Tan Dung has approved a proposal by Vinacomin to half the coal export tax to from 20 percent to 10 percent.

Circular 169/2012/TT-BTC signed by Deputy Minister of Finance Vu Thi Mai is what Vinacomin has expected for a long time to lower coal export prices and thus step up shipments amid slackened global demand. The tax cut would not only increasing export volumes, reducing inventories and safeguarding jobs in the mining industry, but also help increase the state budget.

Since November, Vinacomin has reduced domestic coal prices. The price of coal sold to cement, fertiliser and paper producers is reduced by 1.5 to 6.7 percent, depending on the type of coal. Price of coal sold to retailers is also reduced by up to 9.5 percent. Coal sold to electricity generators is excluded from the price adjustment.

Investment restructuring

Vinacomin plans to divest its VND618 billion investments in non-core business fields, mainly in banking-finance and insurance.

Among the total investment capital to be divested, the biggest amount is VND318 billion that the firm had poured into Saigon-Hanoi Commercial Bank (SHB). Vinacomin plans to withdraw it as it makes up around 50 percent of its non-core investments.

In the near future, Vinacomin will continue taking back capital from the companies in the insurance and securities industries. For instance, it will complete withdrawing VND10.5 billion from BIDV Expressway Development Co. within 2012 before getting back VND47.8 billion it had invested into Hai Ha Economic Zone Investment and Development Co.

The group has now pulled back nearly VND60 billion from Ha Tinh Port JSC, Ha Tay Real Estate JSC, Dak Nong Wolfram JSC and Long Thanh International Airport JSC.

Also, as part of the plan to withdraw from non-core operations, the Hanoi Stock Exchange was planning to hold an auction on October 3 to sell 5.94 million SHB-Vinacomin Insurance JSC shares which Vinacomin was holding at the starting price of VND10,000 per share. However, the auction failed as just one investor registered to join.

The group expects to divest all non-core investments in 2014 so as to focus on five major areas, namely coal, mineral, electricity, industrial explosive materials and mechanical engineering.

Source VCCI

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