Vinacomin: 15 Years of Development

After 10 years operating in the model of Corporation 91 (the corporation will be developed toward a conglomerate), the Vietnam Coal Corporation was transformed into the Vietnam Coal Group and operated in the form of holding company since August 2005. Then, on December 26, 2005, the Prime Minister signed a decision to establish the Vietnam National Coal - Mineral Industries Group from the merger of the Vietnam Coal Corporation and the Vietnam Minerals Corporation. Then, the parent company of Vietnam Coal Corporation was renamed to the Vietnam National Coal - Mineral Industries Group while the Vietnam Minerals Corporation and other companies were subordinates of Vinacomin.

 

After becoming a group, Vinacomin has reshuffled its organisation to boost operating efficiency and benefit a parent-subsidiary operating model. The group has focused on equitising State-owned companies; admitted companies operated in all industries and localities, set up new companies and acquired other companies.

 

The coalminer first of all focused on the privatisation of small-sized commercial, service and supporting subsidiaries. It also accelerated the privatisation of large-sized coalmining and mechanical subsidiaries. At the same time, it also transformed coal and mineral companies into one-member limited liability companies, instead of privatising, to ensure the national energy security.

 

Since it became a group, Vinacomin has admitted dozens of companies from all economic sectors in many localities, founded 11 new subsidiary companies and nine affiliated companies. Remarkably, the group acquired many companies in Vietnam and other nations like the whole acquisition of foreign-owned Heritage Ha Long and Hanoi hotels, making them wholly Vietnamese-owned entities. In Cambodia, Vinacomin also made a purchase of over 70 percent of equity in Southem Miming to obtain the controlling power.

 

Specially, over the past one year, Vinacomin aggressively reshuffled its mining, mine construction, screening, transporting companies to boost its efficiency. The group has basically formed a synchronous screening system to improve its mining activities across the country.

After 15 years of reform, Vinacomin has made remarkable strides in all aspects, established the roles of the holding company towards subsidiaries and member companies; asserted the leading roles of Vinacomin in the national economy, especially when Vinacomin is one of three backbones to guarantee the national energy security.

 

With improved production and business activities, the production output annually expands 11.5 percent, revenues 25 percent, profit 7 percent and salaries 9.3 percent. The returns on equity ratio reached 33.6 percent and the owner’s equity increased 2.4 folds.

 

Regarding multi-sector business development, Vinacomin steps into other business fields. At present, non-coal fields make up nearly 40 percent of its revenues. Other business scopes will centre the core business of mining to create value-added chains. For example, coalmining will be attached to investment and construction of coal-fired power plants (using low-energy coal), investment in coalification (turning coal into ammoniac, nitric acid to produce ammonium nitrate). The group will also develop metal ore exploitation in combination with building metallurgical works and accompanied chemical workshops; exploit limestone, clay and additives to manufacture cement and construction material; speed up manufacturing and supply of industrial explosives; develop mining machine-oriented engineering sector to produce specialised vehicles and trucks; expand geological services, sciences, technologies, investment consulting, trade, tourism and maritime; accelerate construction of mining and metallurgical works, supply of environmental services, investment into real estate; and others.

 

Tran Xuan Hoa, General Director of Vinacomin, stressed: Vinacomin’s activities are oriented toward sustainable, more environment-friendly and more expansive development while its resources and capital are preserved and expanded. The group’s contributions to the State Budget exponentially increase year after year. For example, in 2006, Vinacomin paid only VND1,588 billion to the State coffers but the figure climbed to VND5,736 billion in 2008. In 2009, according to General Director Hoa, in spite of adverse impacts of the global economic crisis, Vinacomin still reached most norms, with coal sales estimated to reach 43 million tonnes and revenues to climb to VND57,000 billion, not smaller than in 2008.

Vinacomin is preparing for public and welfare investment projects for Quang Ninh province like building roads leading to Mong Cai, cultural houses and hospitals. These are good signs from Vinacomin.