The Vietnam National Coal and Mineral Industries Holding Corporation is seeking PM approval to cut coal export taxes to 10 percent to ease its difficulties.
The Vietnam National Coal and Mineral Industries Holding Corporation (Vinacomin) also said that the industry’s outlook is quite gloomy and they would not make any profits in 2012.
According to the corporation, both sale and coal prices have dropped fast compared to the same period in 2011.
In June, coal sale stood at only 43 percent of the annual plan and just 87 percent of last year’s rate. Revenues stood at 42 percent of the annual plan and fell 9 percent compared to previous year. Meanwhile their mineral sale also fell below expectations.
In addition to domestic woes, coal exports also had to compete fiercely with supply exceeding demand.
As of June, their inventory stood at 8.5 million tonnes, pushing up borrowing costs. Furthermore, the rise in environmental fees and taxes have increased manufacturing costs by VND 2.2 trillion (USD105 million).
Another factor that make Vinacomin’s revenue fall is the cheap price they sell coal to the electricity sector, they said.
From July 1, when electricity prices increased, coal price also went up by 10-11.5 percent but Vinacomin said they lost VND8.5 trillion (USD407 million) because their prices were still cheaper than market prices.
Vinacomin’s revenue also dropped VND4 trillion due to the fall in coal export prices. Only 25,000 tonnes were sold and they have no new contracts as of July 15.
According to Vinacomin, the 20 percent tax rate is too high during a period where world coal price have rapidly fallen. Since they can’t cover their expenses, the corporation is reducing export volumes. “The government will not be able to collect taxes due to small export volume.” they said and asked to lower the export tax to 10 percent.
Last year, Vu Huy Hoang, minister of Industry and Trade said that Vietnam might have to import coal from 2015. The government ordered related agencies research coal imports from Australia, Indonesia and Russia.