Big Consumers Disagree with Coal Price Hikes

A quadripartite meeting yesterday [November 2] among industries of coal, cement, fertilizer and paper chaired by the Ministry of Finance failed to reach any agreement on coal price hikes as the biggest coal customers did not accept the increase, Lao Dong (Labor) Newspaper reports.

 

Leaders of the cement, fertilizer and paper industries all said they were instructed by the leadership of the Ministry of Finance to continue to negotiate with one another to reach a final method on this issue. In the case no agreement is reached, they will propose the government for intervention rather than accept the price rise decided by the coal industry itself.   

 

Earlier, the Vietnam Coal and Mining Industries Group (Vinacomin) announced to big coal consumers including these three sectors that it would raise prices of coal from November 1. Prices of coal for electricity production alone are still unchanged as they are waiting for the Prime Minister’s idea.

 

Accordingly, the price of coal dust 4a sold to the Vietnam Paper Corp. (Vinapaco) increases by 40 per cent to VND440,000 per ton. Price of coal dust 2b for the fertilizer industry rises by 50 per cent as compared with the current VND614,000/ton. Vinacomin also plans to continue to raise prices of coal sold to the fertilizer sector from July 1, 2007.

 

Also, prices of coal dust 3a for cement production increase from VND384,400 to VND554,000 per ton from November 1, 2006 and to VND600,000/ton from July 1, 2007. Similarly, for coal dust 3b, prices rise from VND369,500/ton to VND532,000/ton and to VND550,000/ton, and for coal dust 3c from VND359,000 to VND517,000 and VND520,000 per ton.

 

In response to the sudden coal price hikes, domestic cement and fertilizer producers are lamenting such a price rise that is cutting deep into their operating profits, and are urgently asking for government intervention to arrange an acceptable increase.

 

Vu Trong Hiep, vice general director of the Vietnam National Cement Corp. (VNCC), said Vinacomin’s sudden coal price hikes are against the spirit of the meeting chaired by the Finance Ministry on October 20 when coal price rise was proposed at 20 per cent. 

 

Meanwhile, Hoang Van Thai, vice general director of Vinacomin said “we are selling coal to big consumers at prices which are below production costs. Domestic coal prices now account for 40 per cent of the world price. We, therefore, always compensate for losses.”