Raw coal

Mong Duong Coal (MDC) achieved profit of VND79 billion in 2010, but by the end of 2020, this enterprise only reported profit of VND27.8 billion. — Photo monduongcoal.vn

As mining activities are seasonal and affected by the weather, revenue and profit of coal mining businesses have fluctuated continuously over the past 10 years.

Vinacomin – Northern Coal Trading Joint Stock Company (TMB) saw an average growth rate of 9 per cent in revenue every year during the 2010-2020 period.

Vinacomin – Coal Import Export Joint Stock Company (CLM) has reported a 17 per cent rise in revenue during the past 10 years, from VND1.6 trillion (US$69.4 million) to VND7.5 trillion.

Ha Lam Coal (HLC), Vang Danh Coal (TVD), Ha Tu Coal (THT) and Mong Duong Coal (MDC) witnessed the same average revenue growth in the 2010-2020 period of 6-7 per cent.

Low profits

Despite earning trillions of dong in revenue, coal companies only achieved tens of billions of dong a year in profit, with some even suffering losses.

Compared to 2010, the profits of coal companies were almost unchanged.

Mong Duong Coal (MDC) had a profit of VND79 billion in 2010 – the highest in the group mentioned above. But by the end of 2020, this enterprise only reported VND27.8 billion in profit.

Coc Sau Coal (TC6) witnessed profit fall from VND67 billion in 2010 to only VND5.6 billion in 2020, the lowest level among the group, although its yearly average revenue is much higher than many other businesses in the industry.

The merger between Cao Son Coal (TCS) and Tay Nam Da Mai Coal (TND) also did not help Cao Son Coal improve its profit in 2020, hovering at more than VND54 billion.

Viet Bac Mining (MVB), which started the equitisation process in 2015, made a breakthrough in profit growth with VND55 billion in 2015, soaring to VND270 billion in 2020, a jump of 37 per cent.

Businesses in the coal mining industry have to confront specific risks such as the reserve of open-pit mines gradually drying up.

Most mines are exploited deep underground, with some at even 300m below sea level. Underground coal mines have higher soil removal costs compared to open-pit mines, which leads to less competitive coal prices.

Mining activities are seasonal and affected heavily by the weather. Due to the negative impact on the environment, taxes and fees for the coal industry are always high and tend to increase.

However, if comparing coal stocks, it can be seen that there are still good stocks with low price-to-earnings (P/E) rates and high dividend payout ratios.

Leaders of Viet Nam National Coal and Minerals Group (Vinacomin or TKV) said that the coal industry was facing many difficulties due to the impact of the COVID-19 pandemic, which has caused millions of tonnes of coal residuals at the yards and warehouses of TKV.

They said the coal demand for the economy in 2021 will not grow much, staying at the same level as in 2020. In addition, the mining conditions are increasingly difficult due to the rising depth underground, hampering the transportation process. — VNS

The Hanoitimes – So far, solar power in Vietnam accounts for 44% of total solar capacity in Southeast Asia.

Environmentalists hope that success in developing solar power will persuade the government of Vietnam to scale back its ambitions for coal-fired plants, according to The Economist.

By the end of 2019, the country counted with 5.5 gigawatts (GW) – more than Australia, with an economy almost six times the size – just two years after the government paid suppliers a generous US$0.09 per kWh produced by big solar farms.

Photo: EVN

Meanwhile, the Vietnamese economy has been growing by 5-7% a year for the past two decades. The government has plans to double power generation by 2030, but estimates that supply may run short as soon as next year.

As a result, it needs to find new sources of power as soon as possible.

Coal is the cornerstone of Vietnam’s energy supply. Under current plans, the fleet of coal-fired power plants will soon triple. But construction has been dogged by regulatory delays, local opposition and flagging investor interest. Building a new plant takes the better part of a decade.

Solar farms, in contrast, incite far less opposition and take about two years to build.

To encourage the development of solar power projects, the government has begun improving the grid and it decreed in November 2019 that in future it would not offer a feed-in tariff, but instead auction the right to sell solar power to the grid, with the winner being the firm that offers to do so at the lowest price.

Later this year it is due to release new targets for generation capacity in 2030. Wind and solar have almost already met their current goal of providing 10% of power, ten years ahead of schedule.

In another move, prices are likely to continue to move in renewables’ favor. Wood Mackenzie, a consultancy, thinks power from large solar farms in Southeast Asia will be at least as cheap as that from almost all coal plants within five years.

Given that coal plants have lifespans measured in decades, Vietnam and others risk locking in unduly expensive generation capacity.

Vietnam’s experience suggests that not all the planned coal plants will be built. But solar sudden spark in Vietnam should at least change officials’ views of what is possible, said The Economist.

According to Wood Mackenzie, Vietnam currently tops Southeast Asian countries in solar power and the country’s solar power accounts for 44% of the region’s capacity.

The country targets to raise solar power capacity to 7.7 GW in 2020, according to Vietnam Electricity (EVN).

The development of solar power in Vietnam has beaten all expectations of developing renewable energy in the country where fossil fuel has played a crucial role for decades, said Melissa Brown, Energy Finance Consultant at the Institute for Energy Economics and Financial Analysis (IEEFA).

This will support Vietnam’s fast growing economy at a time when the country’s slow-moving pipeline of baseload coal projects faces new environmental challenges, she noted.