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Aug 07, 2019 / 07:48

Vietnam mulls US coal purchases as two nations move to balance trade

Vietnam spends nearly US$3 billion on coal imports annually.

Vietnam is reportedly considering purchasing US coal to address an ongoing shortage of resources for power generation as the two countries are working to better the bilateral trade balance.
 
Xcoal Energy & Resources CEO Ernie Thrasher and Dang Thanh Hai, director general of state-run coal producer Vietnam National Coal – Mineral Industries Corporation (Vinacomin) in Hanoi on August 1, 2019. Photo: Vinacomin
Xcoal Energy & Resources CEO Ernie Thrasher and Dang Thanh Hai, director general of Vietnam National Coal – Mineral Industries Corporation (Vinacomin) in Hanoi on August 1, 2019. Photo: Vinacomin
CEO Ernie Thrasher of Pennsylvania-based Xcoal Energy & Resources met Dang Thanh Hai, director general of state-run coal producer Vietnam National Coal – Mineral Industries Corporation (Vinacomin) last week in Hanoi to discuss the possibilities of shipping US coal to Vietnam, Vinacomin said on its website.

The move is part of Hanoi’s efforts to narrow its trade surplus with Washington following threats by President Donald Trump to impose tariffs on its products amid the Sino-US trade war.

The report gave no further details on the possible imports. However, if Hanoi decides to purchase US coal, it could also help the country deflect criticism from Washington regarding the country’s trade practices, as well as potential US tariffs, Stratfor commented. 

In reality, Vietnam has been seeking to expand its coal sector to meet the country’s energy demand which is forecast to grow 10%-plus per year. Meanwhile, coal-fired power is likely to account for roughly 50% of Vietnam’s power generating capacity by 2030, up from 38.1% currently, according to the Ministry of Industry and Trade.

Under the National Power Plan by 2030, the country needs approximately 64 million tons of coal for power generation by 2020 and 131 million tons by 2030. 

Vietnam has recently become a net coal importer with most of its shipments coming from Australia, Indonesia, Russia, and China. In the first four months of 2019, Vietnam imported 13.34 million tons of coal worth US$1.27 billion, up 128% and 85% on year, respectively, the Dau Tu newspaper quoted Vietnamese customs.

Vinacomin annually produces about 40 million tons of coal from domestic mines.

The Ministry of Industry and Trade said last week that the country has to import 680 million tons of coal to feed its power plants during the 2016-2030 period.

Vietnam will face severe power shortages from 2021 as electricity demand outpaces construction of new power plants, the ministry said in an interview with Reuters.

For its part, Vietnam’s Binh Son Refining and Petrochemical said last month it will import 2 million to 3 million barrels of US West Texas Intermediate (WTI) crude in the second half of this year for its Dung Quat refinery.

The Vietnamese government said in June its Ministry of Industry and Trade and the US Department of Energy would soon sign a memorandum of understanding on imports of liquefied natural gas (LNG).

Vietnam does not have an LNG import terminal, but it is looking for partners to develop a liquid gas import business, also primarily for power generation.

Vietnam’s trade surplus with the US widened to US$20.59 billion in the first half of this year from US$15.55 billion a year earlier, according to Vietnamese customs data.