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Coal imports must remain in future energy security strategy

 

Coal imports must remain in future energy security strategy

(22-10-2008)

Deputy general director of the Viet Nam National Coal and Mineral Industries Group, Hoang Van Thai, spoke with Dau Tu (Viet Nam Investment Review) newspaper about the group’s plan to import coal.

1. What problems exist in the importation of coal?

When we import coal, we want long-term contracts with sustainable prices for a certain time. However, due to the recent energy crisis, our partners don’t want to negotiate on terms agreeable to us. While we want a sustainable supply period of 20 to 25 years, they’re only interested in half of that time.

We want to calculate prices by a certain formula, but the sellers always prefer to calculate according to the market prices each year.

2. Even if you agree to such conditions, can you get enough coal?

Importing coal for electricity production requires abundant supply sources, the closer to home the better. Indonesia and Australia are ideal, however Indonesia, which is nearer, has already done deals with countries such as Japan, South Korea and China. So when we want to buy coal, there are few opportunities.

Investors who hold rights to exploit coal mines in Indonesia have advised us to invest in transportation since there is no chance of investing in mine exploitation.

3. Is five years enough time to penetrate another country’s coal market?

No. A European partner of ours spent seven years looking for an opportunity in Indonesia. Now they have a foothold and long-term contracts.

4. Are there any opportunities for Viet Nam?

There are none at coal mines in eastern Indonesia, which are huge, easy to exploit and “open cut” (no tunnelling). Those in south Indonesia are still available, but this isn’t the right time to discuss exploitation. However, we can invest in other fields to get a foothold.

5. Some domestic private enterprises who want to invest in power plants said that they could find partners with huge and long-term coal supply sources in Indonesia and Australia. What do you think?

It’s possible because private enterprises are more dynamic and have different processes than State-owned enterprises.

6. Vinacomin has deals with two Indonesian enterprises to buy more than three million tonnes of coal a year. How are they going?

We have just signed the contracts in principle.

7. Vinacomin plans to build a 100MW power plant in Phu Quoc. How can the group run it?

A lifetime contract would be good. The 100MW power plant will not be a big consumer and we have sufficient domestic supplies. We plan to start work on the plant next year and have it in operation by 2011. — VNS