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Vietnam coal imports poised for possible early start

Industry Official Forecasts a 2015 Launch, Two Years Ahead of Expected Start

Vietnam will likely start importing coal next year—two years earlier than expected—to help generate electricity to keep up with rising business and consumer demand, the chairman of an energy trade group said Thursday.

"Domestic coal production is slowing down, while several new coal-fired power plants will become operational over the next years," Vietnam Energy Association Chairman Tran Viet Ngai told The Wall Street Journal.

Mr. Ngai made his prediction after Deputy Prime Minister Hoang Trung Hai on Tuesday told the Ministry of Industry and Trade to adjust the country's plan for coal imports and consider an earlier start date and larger volumes, according to a statement on the government's website.

Mr. Hai didn't specify when coal imports would begin and couldn't be reached for further comment.

The deputy prime minister also told state-owned coal producers to maximize their exploration and production to increase output, noting that production is falling below government's targets.

Vietnam's electricity demand is expected to rise by an average of 14% a year during the 2011-2015 period and subsequently by 11% a year through 2020, according to the Asian Development Bank.

Coal is expected to play an increasingly large role in meeting that demand. Vietnam has been relying solely on domestic coal, but supplies are proving increasingly harder and more costly to retrieve.

"It's not easy for Vietnam to increase its coal output now, given that production cost is higher while there hasn't been sufficient investment in the coal mining sector," Mr. Ngai said. "We now have to dig deeper to get coal and importing is inevitable."

Vietnam has placed orders to import coal from Indonesia, Australia, India and China, Mr. Ngai said, but he added that the first two sources are the most promising. He said annual imports might rise to 40 million tons by 2020 and 100 million by 2030. By 2020, Vietnam should be burning 67 million tons of the fuel annually, from 12 million in 2012, under the government's long-range plans.

Coal-fired plants account for 37% of Vietnam's total electricity generation capacity, but would provide 60% by 2020, said Mr. Ngai.

Vietnam's other major sources of electricity are facing their own obstacles. The nation's hydropower potential has almost been fully tapped, while commercial disputes and sovereignty issues are delaying use of the country's abundant gas reserves. Renewable-energy sources beyond hydropower are in their infancy, and Vietnam's first nuclear power complex isn't expected to produce energy before 2023.

Nguyen Van Bien, deputy general director of state-owned Vietnam National Coal-Mineral IndustriesHolding Corp., said the recent economic slowdown has dented coal-mining investment.

Mr. Bien said Vietnam has been cutting back on coal exports to save the fuels for domestic use.

According to government data, Vietnam exported 12.8 million tons of coal in 2013, down 16% from a year earlier and well below a recent peak of 25 million tons in 2009. Exports are expected to fall 38% to eight million tons this year and to between four million and five million tons next year.

Source: The Wall Street Journal