Thousands of jobs at risk over spat between Vietnam coal corporation and power group

Vinacomin’s stockpile stands high at 9.3 million tons, largely due to reduced purchases by EVN, Vinacomin officials said at a meeting with government representatives on Monday.

In May, EVN  reduced its planned purchases from Vinacomin by 2 million tons to 17.92 million tons, saying imported coal was cheaper.

Vietnam is running out of hydropower sources so it plans to focus on developing coal-fired thermal power. The proportion of thermal power will rise to 49 percent by 2020 and 55 percent by 2025, said EVN

According to Do Hoang Anh Tuan, deputy minister of finance, domestically produced coal currently costs more than imported coal, making it hard to compete. For example, a certain type of imported coal dust costs around VND 1.5-1.6 million ($66-71) per ton, while the same type produced by Vinacomin costs around VND 2 million each ton.

“The price of domestic coal should be competitive; at least the same or lower than imported coal, but we still need to ensure international market commitments are met,” said Tuan.

While insisting EVN should continue to buy its coal this year, Vinacomin officials warned that if EVN cancels the order for 2 million tons, some 4,000 workers could lose their jobs and a coal mine could be closed.

Government Office Minister Mai Tien Dung came to Vinacomin’s defense, saying that while abiding by market rules, “we should ensure domestic production and protect established corporations like Vinacomin, otherwise 4,000 workers could be out of a job.”

The government also asked Vinacomin to reduce its production costs and price to ensure they are competitive with imported coal.

For its part, the Ministry of Industry and Trade has been asked to look at long-term measures to protect domestic coal, while Vinacomin should work with local authorities to fight illegal coal exploitation and smuggling.

To end the meeting, Dung called on Vinacomin to reach its VND 110 trillion revenue and VND 2 trillion profit targets in 2017.

According to a report by Vinacomin, the corporation produced some 19.87 million tons of raw coal in the first six months this year, accounting for 55.2 percent of the annual target.