Vinacomin, the State-owned mining giant, is requesting the Prime Minister reduce the export tax on coal from 20 to 10 per cent, following its rejected proposal earlier this month that the tax rate be reduced to zero.
HA NOI —
At that time, the Prime Minister agreed to increase the price of coal sold to Electricity of Viet Nam (EVN) for power production, ensuring Vinacomin a sufficient profit margin for needed investments and expansion of coal mines.
However, he also asked the group to restructure its operations to reduce costs and limit exports.
But Vinacomin has continued to press its proposal for lower export taxes, arguing that the mining industry was faced with difficulties due to steep decreases in both domestic demand and exports.
In the first half of the year, coal consumption fell by 13 per cent from the same period last year, to 19.7 million tonnes. Of this figure, domestic consumption accounted for 12.8 million tonnes, 12 per cent below the corresponding period last year.
Meanwhile, Vinacomin said coal exports have faced fierce competition from other countries as demand has slowed, resulting in sharp price declines. Global coal prices have fallen by 25-40 per cent so far this year, the company said, and total exports declined by 15 per cent in the first half of the year to a total of 6.9 million tonnes.
The group cited Viet Nam's high export taxes as one of the reasons its coal has become less competitive than that from other countries, noting that it has been unable to land any new export contracts this year.
While Vinacomin admits that higher prices for coal paid by EVN could add VND300 billion (US$14.3 million) to its earnings, the amount is wiped out by falling export revenues. Vinacomin also faces costs of VND2.2 trillion ($105 million) for interest payments on loans and environmental taxes.
Neither the Ministry of Finance nor the Ministry of Industry and Trade back Vinacomin's drive to hike coal exports through a reduction in export taxes. — VNS