Coal being exploited at Tay Nam Da Mai Mine in the northern province of Quang Ninh. Vinacomin is seeking approval to lower the export tax on coal, claiming the mining industry faces difficulties due to declining demand both at home and abroad. — VNA/VNS Photo Trong Dat

HA NOI (VNS)— The Viet Nam National Coal and Mineral Industries Group (Vinacomin) is seeking approval to lower the export tax on coal, claiming the mining industry faces difficulties due to steep decreases in demand both at home and abroad.

The move comes just six months since the Ministry of Finance agreed to cut the tax from 20 to 10 per cent, helping Vinacomin export 6.5 million tonnes of coal and reduce its inventory at the end of last year.

Nguyen Van Bien, Vinacomin's deputy general director, said the current export tax of 10 per cent was still high in comparison with other countries. It proposed the ministry make the export tax on coal similar to the average world prices.

Accordingly, if the average price was less than US$75 per tonne, the export tax would be 10 per cent. If the price was at $75-85 per tonne, the tax would be 15 per cent and 20 per cent for a price of over $85 per tonne.

Bien said the tax mechanism would ensure transparent calculations while supporting the industry in coal production and exports.

He added that the coal sold to the Electricity of Viet Nam (EVN) in the first quarter of the year was at just 71 to 73 per cent of the 2011 levels, causing Vinacomin a loss of VND1.5 trillion ($71.4 million).

Vinacomin had implemented cost-cutting solutions to save input costs for production and investments - this was the reason why the group was allowed to increase the price of coal sold to the EVN last month by 21-22 per cent. However, Vinacomin said the increase was swallowed up by this year's coal production costs.

In the first three months of the year, the group mined 11.7 million tonnes, accounting for 25 per cent of its yearly target. It sold 3.94 million tonnes for domestic use, an increase of 23 per cent over the same period last year.

The group said it would give priority to domestic users of around 28 million tonnes this year. It forecast total consumption and exports would be lower than last year.

Coal consumption last month was 700,000 tonnes, just 60 per cent of the March figure.

Increasing the price of coal sold to the EVN would add VND2 trillion ($95.2 billion) to Vinacomin, thus making a hike in electricity tariffs likely.

The EVN said the cost of coal accounted for 70 per cent of thermo electricity prices and that thermo power made up one quarter to one-third of the country's total power supply.

It added that if coal prices were increased, electricity tariffs would be higher.

It expected the price would be increased by 11 to 13 per cent this year as the central region received low amounts of rainfall, prompting the mobilisation of power from thermo electricity plants to the national grid. — VNS