Ministries asked to ease difficulties for coal sector

Thursday, Oct 06, 2016 17:35

A part of the Nui Beo open-cast mine in the northern province of Quang Ninh. — Photo

HA NOI (Biz Hub) — Deputy Prime Minister Trinh Dinh Dung has asked relevant ministries and agencies to put forth proposals to ease difficulties for Viet Nam National Coal-Mineral Industries Holding (TKV).

The aim is to ensure competition, retain market share and improve production capacity.

The Ministry of Industry and Trade was assigned to cooperate with the ministries of finance, natural resource and environment, planning and investment and relevant agencies to consider TKV's problems, particularly regarding policies on taxes relevant to the coal sector, methods on restructuring the corporation to develop business and production and addressing competition in domestic and foreign markets.

With regard to the coal consumption market, the deputy PM asked ministries to issue policies for coal exports in the 2016-20 period to help the sector take the initiative in managing its production and stablising jobs for workers.

In recent years, the coal sector has continuously been faced with difficulties. It had to exploit coal from the earth's deep layer, but consumption has been very sluggish, leading to a large inventory volume.

Meanwhile, there has been an increase in taxes and fee, affecting income and living standards of the workers.

Since July 1, 2016, the tax on natural resource exploitation has increased by three per cent to touch 12 per cent for open-cast mining and 10 per cent for pit-mining. Environment fee was raised from VND6,000 to VND10,000 per tonne.

A TKV report dated June 30, 2016, showed that there were was a stock of nearly 10 million tonnes of coal due to the decrease in consumption in the coal market. In that context, TKV's coal price was still high in comparison with its competition, which is why it had failed to capitalise on exports.

Domestic consumption has continuously reduced since early this year because key users such as thermo-electricity, cement and fertilisers had all cut productivity.

According to, coal producers in the country's western region, including Nam Mau, Uong Bi and Vang Danh, have high volume of inventory, with a total of more than 910,000 tonnes of crude coal.

TKV Deputy General Director Nguyen Ngoc Co said the corporation's expense was estimated to reach more than VND1.3 trillion (US$58.18 million) per year, excluding an additional VND70 billion per year as environment fee, which will be charged according to the amount of gravelly soil discharged from the crude coal to the environment.

With the new taxes and fees, TKV estimated that it would have to pay VND731 billion as tax for natural resource exploitation in the latter half of this year. In 2017, it would have to pay VND1.5 trillion for this tax.

The sector is also witnessing an exhaustion of open-cast mines. The open-cast mine with the largest volume of coal is the Nui Beo mine. The sector has been perfunctorily exploiting the open-cast mines, with annual volume one-fifth compared with 2012. It will exploit pit-mining by 2018.

As for pit-mining, the sector has been exploiting coal at a depth of 300,and deeper, where there is high risk of fire and gas explosion. Therefore, the increase in taxes, fees and expenses for large exploitation projects has pushed the corporation's coal price higher, making it less competitive. — VNS

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