VietNamNet Bridge – Local experts have warned that the country's coal reserves could be exhausted by 2015, creating a dependency on expensive imported coal.

As the country is currently selling coal at a cheaper export price than import, Vietnam may end up buying back some of its coal at a higher price if national reserves are exhausted.

At the current rate of exploitation and export, supplies may run dry even earlier than 2015, experts have warned.

Vietnam exported 32.5 million tonnes of coal last year, bringing in just over US$1 billion. With coal needed to run thermo-power plants, that money would be enough to buy back just 7.5 million tonnes at the rising world price.

The Ministry of Planning and Investment had already warned back in 2006 that the imminent exhaustion of reserves would badly impact energy security.

Despite the warning, coal export volume jumped five-fold last year against 2006 figures. That figure excluded 10 million tonnes of coal estimated to be smuggled every year. In 2007 figures continued to rise up 11 per cent from the previous year.

Deputy Minister of Industry and Trade Bin Xuan Khu said that his ministry planned to cut coal exports this year by just 5 million tonnes.

However, officials from the Viet Nam National Coal Mineral Industries Group (Vinacomin) said that Vietnam should limit its export to 5 million tonnes a year, as rising demands of the national economy are expected to skyrocket in the near future.

Last year, the average export price for crude coal was $32.2 per tonne at Quang Ninh Port, while the export price has now climbed to $60 per tonne. This means that with the price differential, Vietnam lost nearly $1 billion.

If Vietnam had to import coal now, the loss would be even bigger as the import prices of coal now hovers at around $135 per tonne, according to Vinacomin officials.

Rising demand

The demand for electricity is expected to increase by 17-20 per cent per year, and thermal plants will have to consume more coal just as Vietnam will have to start importing the fuel source.

According to the Ministry of Industry and Trade, Vietnam will need an average of 4,000 extra mega-watts of power a year to satisfy rising demand.

Water and gas resources to generate electricity are also beginning to run out, and power production will depend primarily on thermal plants or coal in the coming years.

While there are plans for several major thermal plants in the central and southern regions, they will require around 6 million tonnes of coal per year operating at just half capacity, according to a Ministry of Industry and Trade official. Assuming that the country will have to import this volume of coal, it will cost the country up to $800 million a year at the current price of $135 per tonne.

Exhaustion

Vinacomin exploits around 50 million tonnes of coal per year, of which 15-20 million tonnes are for domestic demand, with the rest exported mainly to China.

Industrial experts said the country's open-cast mines are nearly exhausted, and the country will soon have to mine under the ground.

The country's largest reserves, estimated at 210 billion tonnes, are in the Song Hong (Red River) Delta, but situated at depths of 100-3,500m.

Vinacomin is preparing to mine the area, but expects to extract only 9-10 million tonnes a year due to difficulties reaching the depth.

In the context of the global energy woe, experts generally agree that ensuring energy security has become an imperative. With limited open-cast reserves of coal, experts are urging officials to seriously consider limiting or cutting coal exports all together.

(Source: Viet Nam News)