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Coal reserves running out, VN to import coal to generate electricity

Domestic coal production is mainly used for electricity production. In 2019, domestic coal for power generation accounted for 76% of total coal output.

Due to difficulties in domestic coal mining, especially the development of new mines, domestic coal production is insufficient to meet the need of thermal power plants using domestic coal (Anthracite). Since 2018, the Vietnam Coal and Mineral Group (TKV) and the Northeast Corporation have had to import coal to supply to power plants.

Coal demand for power generation has increased, from 24 million tons in 2015 to 40 million tons in 2018 (up 67%). In 2019, coal demand for power production was 52 million tons, including 40 million tons of anthracite. The current output of anthracite coal for power production of the TKV and Northeast Group is only 35 million tons (equal to 88% of total demand), so Vietnam has to import coal. In the coming years, the demand for anthracite coal will continue to increase when a number of new thermal power plants come into operation such as Na Duong II, Hai Duong, Thai Binh 2, An Khanh - Bac Giang, and BOT Nam Dinh I.

Notably, Vietnam imports low-quality coal used for electricity production while it exports high quality coal that the country has not yet used or cannot use it all. The export of high-quality coal at a high price, and import of cheap coal for power generation is also a good solution. Vietnam’s coal exports are decreasing and this product has no longer been in the top 15 key export products of the country.

It is expected that the import of coal for power generation will increase more and more. The Institute of Energy estimates that total domestic coal production that can be supplied for electricity production in 2020 was about 35 million tons and will rise to about 36.3 million tons in 2025, about 39.8 million tons in 2030, about 39.5 million tons in 2035 and up to 39.5 million tons/year for the period 2035-2045.

With this scale, domestic coal output can only satisfy part of the demand for coal of thermal power plants and the import of coal will continue to rise.

Looking for more import sources

Since late 2021, the price of coal has increased rapidly. According to the Electricity of Vietnam (EVN), in late March 2022, the entire national power system lacked more than 3,000 MW of coal-fired power plants due to the lack of coal.

According to the TKV and the Northeast Corporation, coal supply will continue to face many difficulties in the coming time, causing power shortage from April onwards.

This is not a new problem, but it has not been solved yet. In recent years, the supply of coal to power plants has faced many difficulties. The amount of coal in warehouses of power plants was at a record low level in 2018. Many power plants did not have enough coal to operate. There were times that they had to reduce capacity due to insufficient coal supply, such as the case of Quang Ninh, Hai Phong, Thai Binh, Nghi Son factories. Particularly, the plant in Quang Ninh had to stop the operation of 2 of 4 turbines due to lack of coal.

It is forecast that Vietnam will have to import a large amount of coal, as domestic output can only meet about 50% of the total demand for coal.

The coal industry plans to renovate and expand its existing mines and invest in new mines. The Ministry of Industry and Trade is currently looking for ways to increase coal imports, including from South Africa, Australia and Laos.

Luong Bang

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