Vietnam to cut coal exports, may phase out shipments
Vietnam, China's largest coal supplier, plans to reduce exports by 32 percent this year and gradually eliminate the sales to meet rising domestic demand, a government official said.
Coal exports may drop to a forecast 22 million metric tons from 32.2 million in 2007, Nguyen Khac Tho, vice director of the Ministry of Industry and Trade's energy and petroleum department, said yesterday in an interview in Hanoi. The ministry will recommend Prime Minister Nguyen Tan Dung halt overseas shipments by the world's eighth-largest exporter of energy coal after 2015.
Vietnam's plans may drive up costs for southern Chinese power producers forced to transport fuel from northern mines or import it from further afield. Prices climbed to records this year because of demand from China, which burns the fuel for 78 percent of its electricity, and disruptions to Australian and South African supplies.
``This will further stretch tight coal supplies in China, coupled with economic expansion and the crackdown on small, inefficient mines,'' Zhu Deren, vice president of China National Coal Association, said by telephone from Beijing today.
Asian benchmark coal prices at Newcastle, Australia, rose $9.04, or 7.8 percent, to a record $125.48 a ton last week, the globalCOAL NEWC Index showed. In Australia, the world's biggest coal exporter, BHP Billiton Mitsubishi Alliance is among at least six mining companies telling customers that shipments may be delayed because of floods.
Coal for delivery in northwest Europe advanced to a record today. The fuel for delivery to Amsterdam, Rotterdam or Antwerp with settlement in the second quarter rose $3, or 2.1 percent, to $145 a ton by 9:41 a.m. in London, according to GFI Group Inc. prices. The contract has gained 17 percent this year.
Vietnam's gross domestic product, the fastest-growing in Southeast Asia, expanded 8.5 percent last year, the most since 1996. This year, authorities want to boost the figure to at least 9 percent.
``Coal is a resource that can't be renewed,'' Tho said in a phone interview. ``Our most important task is to meet domestic demand to ensure national energy security.''
Hanoi-based Vietnam National Coal & Mineral Industries Group will import coal from Indonesia and cut sales to China by 19 percent this year to meet demand from domestic power producers, an official at the state company known as Vinacomin said. Shipments to China will drop to 13 million tons from 16 million tons in 2007, said the official, who asked not to be named because of company rules.
``Supplies to power plants in southern China's Guangdong and Guangxi provinces will be affected,'' Xie Juchen, general manager of Zhong Neng Power Industry Fuel Corp., said from Beijing today. Power plants in the south prefer Vietnamese coal as it is cheaper to buy than transporting fuel from mines in the north, Xie said.
Zhong Neng Power is the coal-purchasing unit of State Grid Corp. of China, the nation's largest electricity distributor.
China, the world's largest producer and consumer of coal, was forced to shut 7 percent of its thermal power capacity last month because of supply disruptions caused by the worst snowstorms in half a century.
China's Guangdong Yudean Group Co. suspended coal talks with Vietnam after suppliers in the Southeast Asian nation increased prices 40 percent, China Business News reported Jan. 30, citing people it didn't name. The suppliers were asking to be paid more than spot-market prices in Vietnam, the report said. Yu Lan, a spokeswoman for state-owned Yudean, the largest electricity supplier in Guangdong province, declined to comment.
Vinacomin's total exports will fall to 20 million tons this year from 24 million tons in 2007. The state coal producer signed an agreement to buy Indonesian fuel, the company official said, declining to give details.
``It will be more expensive if we transport coal from the north for the plants'' in the south, Tho said. The country plans to keep total output at about 40 million tons in 2008, Tho said. Vinacomin produces 98 percent of the nation's coal, he said.
By Beth Thomas & Winnie Zhu - Bloomberg - February 15, 2008.