Vietnam coal group explains preference for exports

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Vincomin, a state-run coal and mineral group, said it has had to use export profits to offset the losses caused by low prices at home.

Because the government set coal prices for cement and power producers at a low level, the more coal Vinacomin sold to these two sectors, the greater their losses became, according to Vu Manh Hung, general director of the group.

According to Vinacomin, the prices of coal supplied to power plants rose in March, but domestic prices are still 60-64 percent lower than export prices.

"If the pricing problem can be solved, coal exports will be cut back sharply," Hung said. 

Vinacomin is set to produce 25 million tons of coal this year. Due to a decline in orders, the group plans to export 18 million tons this year, down 6 million tons from 2009.

But while a majority of local coal output has been set aside for exports, many cement plants were forced to shut down due to a coal shortage.

State-run Vietnam Cement Industry Corporation, also known as Vicem, said its factories require 5,000 tons of coal every day to operate but Vinacomin can usually only meet half of that demand.

Vicem, which accounts for 38 percent of Vietnam's cement output, also rejected an accusation by Vinacomin that local cement plants use outdated technologies that require an excessive amount of coal.

Local cement producers are using Japanese and European technologies, Vicem said, arguing that the real problem lies in a domestic coal shortage.

Vietnam will gradually cut down on coal exports as local demand  surges and supply declines, Minister of Industry and Trade Vu Huy Hoang said in May.

The country is expected to start importing coal in 2015 when a number of new power plants go online.

Analysts say it's time for Vinacomin to reconsider its export policies to ensure sufficient supplies for the domestic market first.

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