Vietnam eyes new coal import sources amid soaring demand

Mysteel Global: Vietnam is actively diversifying its coal import sources, with an aim to address supply shortfalls that the country has been facing due to soaring electricity demand.

Vietnam plans to increase coal imports from southeast Africa's Mozambique to meet rising demand from its industries, especially the power generating sector, according to a meeting held between Vietnam's National Coal and Mineral Industries (Vinacomin) and Mozambique President Filipe Nyusi during his recent visit to Vietnam, local media reported.

An official from Mozambique's mineral resources and energy ministry was quoted as saying that Nyusi had encouraged Vinacomin representatives to visit Mozambique.

Vietnam has not sourced any coal from Africa in the past, data from Vietnam Customs showed. Shipments from its main suppliers- Indonesia, Australia, and Russia account for over 70% of its imports. About two-thirds of Vietnam's electricity generation is based on fossil fuels.

Mozambique boasts an estimated 30 billion tonnes (bnt) of coal reserves, with steam coal comprising 25-30% and coking coal constituting the balance. Though the country has been stepping up the development of untapped coal deposits and coal exports to more countries in recent years, lack of transport infrastructure remains the main drag, Mysteel Global highlighted.

Meanwhile, Vietnam is also working to boost coal imports from neighbouring Laos. In a meeting in late July, Vietnam's Minister of Industry and Trade, Nguyen Hong Dien, discussed the current challenges in coal trade between the two countries, local media reported. Vietnam's Ministry of Industry and Trade and Laos's Ministry of Energy and Mines had signed a memorandum of understanding (MOU) in this regard in July last year.

According to the MOU, the two agreed on a target for Laos to export 20 million tonnes (mnt) of coal to Vietnam per year, though no timetable was given. Vietnamese customs data indicated that Vietnam's total coal intake from Laos totalled only 1.27 mnt over January-July this year. In the long term, Vietnam aims to invest in coal exploration and extraction in Laos, synchronise infrastructure improvements, and build conveyor belts for coal transportation, the media reports said.

Vietnam has been grappling with severe coal supply shortages this year, as accelerated industrial production activities as well as strong summer heat across the country have elevated electricity demand.

However, increasing domestic coal production faces difficulties. Data from the country's General Statistics Office showed that Vietnam's coal output in July hit a five-month low of 3.53 mnt, falling by 8.54% from June and lower by 10.82% y-o-y.

In response, the country has accelerated coal imports, with its coal intake in July notching a record high of 7.05 mnt, jumping by a considerable 29.8% y-o-y, the customs data showed.