VietNamNet Bridge – Cement producers have violently criticized the Vietnam Coal and Mineral Industries Group (Vinacoal) for its refusal to provide coal to cement plants. Meanwhile, Vinacoal has frankly said that it does not have enough coal to satisfy the demand of so many cement plants which have been mushrooming recently.

Several days ago, the Vietnam Cement Corporation (VCC) stirred up the public opinion when it said at a press conference that cement plants were thirsty for coal, and that many plants were likely to halt their operation because of the lack of coal. It seems that the public is on VCC’s side in this case, because it heard that even though Vinacoal said it did not have coal to sell to domestic enterprises, it continues to sell coal abroad.

In response, Vinacoal said that most of the cement plants still have not paid for the coal purchased through contracts. The only coal supplier also said that the lack of coal for cement plants was to be expected because too many cement plants have been established recently.

Vu Manh Hung, Deputy General Director of Vinacomin said at the yesterday’s press conference on reviewing the production and business of the economic group in the first nine months of the year that in many cases, buyers themselves wrongly assessed the volume of coal to be supplied. Some cement plants ordered a smaller volume than expected, because they became operational later than initially planned. Other cement plants, due to financial difficulties, could not make payment on schedule.

According to Hung, in principle, buyers have to make payment 14 days after they get deliveries at the latest. However, many cement plants had owed money to Vinacomin for a long time, and Vinacomin had to halt further supply.

However, Hung declined to give the exact sums of money cement plants still owe the coal supplier.

When asked why Vinacomin says it cannot satisfy the demand of all cement plants, though it still has coal for export, Hung frankly said that Vinacomin has to export coal in order to earn money.

“We have to export coal to earn money for re-investment. Vinacomin needs to make profit to have money for the welfare fund for its workers,” he said.

The problem lies in the fact that currently, Vinacomin has to sell coal to domestic consumers at the prices which are 10 percent lower than the export prices. Especially, the prices at which Vinacomin sells coal to electricity plants are just equal to 50-60 percent of the export prices.
Hung emphasized that Vinacomin has done everything it could to provide coal to the cement industry, and that it has fulfilled all the contracts signed with cement producers.

By the end of September 2010, the total volume of coal provided to cement plants had fulfilled 68.5 percent of the plan. Especially, the volume of coal provided to the cement transport company belonging to VCC had reached 1.18 million tons out of the total volume of 1.5 million tons Vinacomin planned to provide in the whole year 2010 under a contract signed between the two sides.

The total volume of coal to be provided to cement producers will be more than 6 million tons. Meanwhile, the master plan on cement industry development says that cement plants would need only 5.9 million tons of coal to produce 50 million tons of cement in 2010.

“Cement plants complain that they are lacking coal. However, in fact, the shortage could have been foreseen,” Hung said.

Right at the beginning of the year, Vinacomin warned cement producers that it would be able to provide only 6 million tons of coal this year. However, the demand from cement plants turned out to be much higher.

Vietnam now has 40 cement plants. Some cement plants asked to buy coal from Vinacomin only after their plants were set up. And Vinacomin said frankly that it would not have coal to provide.

According to Hung, cement plants should have reconsidered their production plan, once they anticipated the coal shortage.

Nevertheless, it seems that Vinacomin wants to “live in concord” with cement plants, since it has committed to providing more coal to cement plants. But Hung has reminded people that the establishment of too many cement plants has led to the oversupply. According to the Ministry of Construction, 1.5-2.5 million tons of cement will be redundant this year.

Pham Huyen