From the archives: Vietnam and Malaysia long term coal import growth
28.11.2018 by Joe Tipson
Vietnam could boast large reserves of anthracite with proven reserves at approximately 5.9 bn tons, mainly in the North-East of Vietnam Quang Ninh coal basin. Due to continuing economic growth domestic consumption has risen year on year and is expected to reach 32 million tons in 2014, while exports have been shrinking and will fall to 10 million tons this year, according to Dinh Quang Trung from Import-Export Division at Vinacomin. Vietnam, previously a coal exporter, is set on boosting imports.
Vietnam’s planned coal production is expected to reach 88.6 million tons by 2030, which is enough to supply the growing cement, paper, fertilizer and chemical industries, pointed out Dinh Quang Trung. Some 51% of domestic demand came from the power sector in 2013, which is forecasted to drop to 47% giving away the percentage points to the growing cement industry. But there are no available sources of coking coal for steel industry and more thermal coal will need to be imported for power industry (about 2-3m tons in 2015/2016, up to 75 m tons by 2030) while cutting on coal exports.
At the moment 88-90% of imports is low CV coal coming from China, Korea, Laos; high CV coal accounts for 10% of imports and comes from Indonesia, South Africa, Australia, Japan, Korea, Malaysia, Thailand. The plan for the foreseeable future is to prioritise the domestic consumption of coal and export reasonable and planned volumes of anthracite. Vietnam will also need to import coking coal for the steel industry and thermal coal to support power industry after the year 2015/2016. It will also be crucial to strike a health balance between exporters and importers operating on the market and build and maintain strong relationships with traditional customers and partners.
Malaysian GDP has been recovering since the 2013 slump, pushing the energy demand. The share of coal in the energy generation mix has been on the rise and is expected to grow from 47% to 63% by 2020, according to Noor Asihin Surani, Senior Manager at Fuel Strategic Planning of TNB Fuels. By 2020 Malaysian coal consumption will grow to 37m tons from 20.4 m tons in 2013 driven by power generation needs, thus boosting imports of mostly medium and low CV coal.
At the moment over 60% coal imports come from Indonesia, 17% from Australia, 12% from South Africa. In 2013 Malaysia started importing coal from Russia (2%, expecting 6% in 2014) for diversification and continues to look for new potential suppliers due to rising demand, pointed out Mr Surani.
Both speakers expressed cautious interest in upstream investment in coal mining but not in the short term given the rising costs of production and the volatility of the market. At the same time, both Vietnam and Malaysia look to benefit as importers in the current low coal price environment, and encourage source diversification in the fuel supply mix.
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