coal report in q1/2018 - virac · report summary 4 • in the past five years, coal production has...

1

COAL REPORT IN Q1/2018

Content

Abbreviations 3

Report summary 4

1. Business Environment 6

1.1 Macroeconomic situation 7

1.2 Legal framework 10

2. Industry Overview 16

2.1 Global situation of coal industry 17

2.1.1 Mining – Consumption 17

2.2 Coal industry in Vietnam 24

2.2.1 History of coal industry in Vietnam 25

2.2.2 Definition and classification 26

2.2.3 Value chain of coal industry 30

2

2.2.4 Industry size and characteristics 32

2.2.5 Situation of coal mining and production 35

2.2.6 Coal mining method 39

2.2.7 Consumption 43

2.2.8 Import 50

2.2.9 Export 55

2.2.10 Price movement 58

2.3 Five Forces analysis and SWOT analysis 61

2.4 Coal industry planning and forecasts 66

3. Enterprises analysis 69

3.1 Introduction of enterprises 72

3.2 Financial analysis

Abbreviations

MONRE Ministry of Natural Resources and Environment

CNCA China National Coal Association

ECM Enterprise Cost Management

COS Cost of sales

CPI Consumer Price Index

LLC Limited Liability Company

JSC Joint Stock Company

NR Net revenue

CI Commercial Investment

EIA Energy Information Adminstration

EVN Electricity of Vietnam

GDP Gross domestic product

IEA International Energy Agency

PAT Profit after tax

SBV State Bank of Vietnam

PVN PetroVietnam

SB Standard Base

GDVC General Department of Vietnam Customs

IS Industry standard

GSOGeneral Statistics Office of Vietnam

VNS Vietnam Standard

TKVVietnam National Coal and Mineral Industries

Group

PC People’s Committee

VICEM Vietnam Cement Industry Corporation

VIRACVIETNAM INDUSTRY RESEARCH AND

CONSULTANCY

3

Report summary

4

• In the past five years, coal production has been volatile,

especially in 2013, the world production of coal has increased sharply.

• Asia is the region with the largest coal production in the world, following were North America, Europe, and the CIS.

• Coal, one of the commodities is being under pressure in the context of the price of mineral resources are affected.

• Vietnam's coal industry is still limited, complex geological conditions.

THE CONTENT IS INTENTIONALLY REMOVED FOR DEMO

PURPOSE

5

• Vietnam coal is difficult to compete with imported coal

due to higher costs but poor quality.

• The business results of the coal enterprises in the past few years have not seen many new breakthroughs but it even tends to decrease.

Report summary


PURPOSE

6

Content

1. Business Environment

1.1 Macroeconomic situation

1.2 Legal framework

7

1. Business environment


Sources: VIRAC, Sources

Contribution structure of mining industry to GDP, 2013 –

2017

GDP growth rate by quarters, 2015-2017

Sources: VIRAC, GSO

%GDP in 2017 is estimated to increase by 6.81% compared to 2016,

Mining and processing

industry in 2017 has decreased considerably


PURPOSE

8

Consumer price index (CPI) in 2017 has a lot of changes.

• In 2017, the VND/CNY exchange rate tends to stabilize and increase

strongly at the beginning of the second half of 2017.

Sources: VIRAC, GSO

Monthly CPI fluctuations ,2014 - 2017

Sources: VIRAC, SBV

VND/CNY exchange rate. 2016-2017




PURPOSE

9

Electricity prices in Vietnam are quite low compared to other countries in

the Asia-Pacific region.

kWh/person

Sources: VIRAC, Worldbank

Electricity consumption per capita of Vietnam, 2000 - 2016

VND/ kWh

Sources: VIRAC, EVN

Average electricity price, July/2007-

December/2017




PURPOSE

10

Content

1. Business Environment


1.2 Legal framework

11

Decision No. 2006 / QD-TTg of the Prime Minister dated December/12th/2017 approves the Project of restructuring Vietnam National Coal and Mineral

Industries Group from 2017 to 2020. Specifically:

Decision No. 1265 / QĐ-TTg dated August/24th/2017 of the Prime Minister adjusts and supplements some articles of Decision No. 60 / QD-TTg on the

planning.


1.2 Legal framework


PURPOSE

The industrial revolution 4.0 (industry 4.0) is on the onset and will affect all

socio-economic sectors, while completely transforming the current production and management system. Industry 4.0 offers enormous opportunities for

leverage and at the same time is the challenge of being left behind and eliminated.

For mining and processing industries of coal mineral, industrial 4.0 is based on the most

widely applied digital platform, which is application software for automation and connection in management, operating.

12


1.2 Legal framework


PURPOSE

13

• The Ministry of Industry and Trade promulgated Circular No. 13/2016 / TT-BCT dated July/11th/2016 on regulations on management of floating coal,

including activities of collecting, buying and selling coal in terms of volume, quality and price and purchasing price of floating coal.

TARIFF RATES OF NATURAL RESOURCES

No, Groups, types of natural

resources

Tariff rates (%)

• Resolution No. 1084/2015 / UBTVQH13 dated December/10th/2015 of the

Standing Committee of the National Assembly on the tariff rates of natural

resources resources is effective from July/1st/2016.

Sources: VIRAC, MONRE


1.2 Legal framework


PURPOSE

14

• The Prime Minister issued Directive No. 21 / CT-TTg dated August/26th/2015, requesting the ministries, branches, localities, agencies and units related

to strengthen the state management of production activities and trading coal.

• Decree No. 203/2013 / ND-CP of the Government stipulates the method of calculating and the level of royalty payment for mineral exploitation shall

take effect from January 20, 2014.


PURPOSE


1.2 Legal framework

15

• The Ministry of Industry and Trade promulgates regulations on the list, standards of coal quality and conditions for exported coal in Circular No.

15/2013 / TT-BCT dated January/2013. Accordingly, only enterprises are allowed to export coal.

Codes Description Tax rate (%)

Nguồn: VIRAC, MIT


PURPOSE


1.2 Legal framework

16

Content

2 Industry overview

2.1 Global situation of coal industry

2.1.1 Mining – Consumption

17

2. Industry overview

2.1 Global situation of coal industry – 2.1.1 Mining – Consumption

• Coal is essential for manufacturing, especially in the energy sector.

Million tons

Sources: VIRAC, BP Statistical Review

Global coal production, 2011 – 2016e

In 2017, the global coal production situation tends to increase sharply compared to 2016.

The reasons for the reversal of coal production activity in 2017 include:


PURPOSE

18

Global coal reservesBillion tons

Sources: VIRAC, BP statistical review

Coal reserves of the world in 2016

Thermal coal reserves of the world in 2016Billion tons

Sources: VIRAC, Platts




PURPOSE

19

• Coal production is not similar by region:Million tons

Million tons

• In 2016, China led the world with coal production of

Sources: VIRAC, BP Statistical review


Top 10 countries produce coal by output, 2016

Coal production by regions, 2011 – 2016




PURPOSE

20

• Coke (fuel) production in the world dropped by 1.6% in 2015,

Sources: VIRAC, IEA

Coal production by product, 2014 – 2016e

Million tons

Structure of coal production by product, 2016e

Sources: VIRAC, IEA




PURPOSE

21

• In 2016, coal consumption will continue to fall by 1.7% compared to 2015,

Million tons

Sources: VIRAC, BP Statistical ReviewSources: VIRAC, BP Statistical Review

Change of coal demand by regions, 2010 -2016Global coal consumption, 2011 – 2016




PURPOSE

22

• Electricity generation accounts for 43.2% of global coal consumption

in 2012

Million tons

Sources: VIRAC, EIA

In 2016, China remained the world leader in coal consumption


Top 11 countries consume coal by output, 2016

Coal consumption by sectors, 2012 – 2040f




PURPOSE

23

Consumption of thermal coal

Consumption of coke (fuel)

Consumption of lignite

Sources: VIRAC, IEA

Consumption of coal by types in 2015




PURPOSE

24

Content

2.2 Coal industry in Vietnam

2.2.1 History of coal industry in Vietnam 2.2.7 Consumption

2.2.2 Definition and classification 2.2.8 Import

2.2.3 Value chain of coal industry 2.2.9 Export

2.2.4 Industry size and characteristics 2.2.10 Price movement

2.2.5 Situation of coal mining and production

2.2.6 Coal mining method

25

• Vietnam's coal industry has been established and has developed over 120 years.


2.2 Coal industry in Vietnam– 2.2.1 History of coal industry in Vietnam


PURPOSE

26

Content








27

Depending on the heat generation, carbon content and ash content, coal is divided into many types such as coal, lignite, anthracite, half anthracite, etc.


2.2 Coal industry in Vietnam– 2.2.2 Definition and classification


PURPOSE

28

There are five major types of coal in Vietnam: anthracite coal, coke (fuel), peat, long flame coal and lignite.




PURPOSE

29

• Long flame coal:

• Lignite:




PURPOSE

30

Content








31

Value chain of coal industry

Input Mining Transportation Consumption


2.2 Coal industry in Vietnam– 2.2.3 Value chain of coal industry


PURPOSE

32

Content








33

Characteristics of Vietnam’s coal industry

• Vietnam's coal industry is still limited, complex geological conditions.

Sources: VIRAC, GSO

Sources: VIRAC, GSO

Number of enterprises and laborers in the coal industry,

2010 - 2016

Revenue and profit of the coal industry,

2010 - 2016Million VND

People


2.2 Coal industry in Vietnam– 2.2.4 Industry size and characteristics


PURPOSE

34

Sources: VIRAC,GSO

• The total number of workers in TKV in 2016 was 92.24 thousand, decreasing by about 4 thousand people compared to the same period in 2015.

Total investment capital and fixed assets of the coal industry, 2010 - 2016

Billion VND


2.2 Coal industry in Vietnam– 2.2.4 Industry size and characteristics


PURPOSE

35

Content








36

• Total reserves and resources of coal are estimated at 48.88 billion tons

by December/31st/2015

Sources: VIRAC, MIT, GSO

Million tons

Thousand tons

Sources: VIRAC, MIT

Clean coal mining output, 2010 – 2017e

Coal reserves and resources by types, 2016


2.2 Coal industry in Vietnam– 2.2.5 Situation of coal mining and production


PURPOSE

37

• Firstly, due to the impact of the financial crisis and the world economic

recession, the demand for coal has decreased gradually

• Secondly, due to the availability of coal reserves with favorable conditions for

mining and low prices have been exhausted,

Sources: VIRAC, TKV

Thousand VND/ton

Production cost of coal, 2001 – 2030F




PURPOSE

38

Tax, fees policies for minerals are increasing in both ways: the number of types of taxes, fees and the level of each type of taxes, fees.




PURPOSE

39

Content








40

• Advantages of the method to mine coal on the surface:

• Disadvantages

Process of mining coal on the surface


2.2 Coal industry in Vietnam– 2.2.6 Coal mining method


PURPOSE

41

Underground mining




PURPOSE

42

• Factors limiting mechanization in coal mining in Vietnam




PURPOSE

43

Content








44

Coal consumption increased sharply in the period from 2012 to 2015 as many

thermal power station which was coal-operating were put into operation,

Sources: VIRAC, MIT, TKV

Million tons

Consumption of coal in Vietnam, 2012 – 2017

Sources: VIRAC, MIT, TKV

Structure of coal consumption, 2017


2.2 Coal industry in Vietnam– 2.2.7 Consumption


PURPOSE

45

• Vietnam National Coal and Mineral Industries Group is the leading coal

mining, consumption and export company with stable revenue of VND 75-

80 trillion per year.

The business performance of TKV has improved markedly in 2017 due

to some main reasons:

Sources: VIRAC, TKV

Billion VND

Business result of TKV, 2013 – 2017




PURPOSE

46

Coal consumption of electricity industry

Year 2020 2025 2030

Power planning VII which adjust coal provision in the coming time

Nguồn: VIRAC


PURPOSE



47

Coal consumption of cement industry

Sources: VIRAC, VICEM

Ton

Coal output provided for some cement plants, 2015




PURPOSE

48

Coal consumption of steel industry

Types of coal 2017 2018 2019 2020

Nguồn: VIRAC




PURPOSE

49

Coal consumption of fertilizer industry

• By the end of 2016, Vinacomin has adjusted the selling prices for 8 types of coal dust in the direction of higher prices than before.




PURPOSE

50

Content








51

• Vietnam has just started importing coal since 2013 with 2.27 million tonnes

of coal

• coal demand for the metallurgical and thermal,

cement industries is growing, forecast of coal import to Vietnam will

increase sharply in the next years.

Million tons

Million USD

Sources: VIRAC, GDVC

Trade balance of Vietnam coal industry with China’s and the

world’s, 2009 – 2017


Thousand tons

Output and import turnover of coal, 2013 – 2017


2.2 Coal industry in Vietnam– 2.2.8 Import


PURPOSE

52

Coal imports have been surged for many years due to distance factors,

Sources: VIRAC, GDVCSources: VIRAC, GDVC

Thousand tons

Coal imports, 2016 – 2017 Import structure of coal by output, 2017




PURPOSE

53


Import structure of coal by value, 2017

• Coke still accounts for a large share of coal imports with




PURPOSE

54

The two largest importing enterprises in 2017 are FORMOSA

Ha Tinh

Nguồn: VIRAC, GDVC

Top 10 coal importing enterprises, 2017e Top 10 exporting enterprises of coal to Vietnam, 2017e





PURPOSE

55

Content








56

• Vietnam produces fine coal but the price is based on two-party contracts, not based on the market prices


2.2 Coal industry in Vietnam– 2.2.9 Export


PURPOSE

57


Million tons

Output and export turnover of coal, 2011 – 2017

BIllion USD

Structure of export market according to output of Vietnam,

2017


Vietnam mainly exports coal to Asian countries such as Japan, Korea, Indonesia,

Thailand, Philippines, etc.

however, from the beginning of 2017, the output of coal exported to

China is very low, and moreover, markets such as Laos, Taiwan and Thailand due to

the impact from the country's application of regulations on quality barriers for

imported coal.


2.2 Coal industry in Vietnam– 2.2.9 Export


PURPOSE

58

Content








59

Date Rate of increasing price

• Vietnam is still applying cross-subsidization between industries, so the price of TKV coal sold to EVN

and the power generation units is also lower than cost.

Adjusting coal prices for electricity industry

Types of coal Unit Selling price

Selling price of coal for electricity production

(Hon Gai-Cam Pha coal since October/1st /2017)

Sources: VIRAC, TKV, EVN

Sources: VIRAC, TKV, EVN


2.2 Coal industry in Vietnam– 2.2.11 Price movement


PURPOSE

60

Selling price of coal to individual

households

Types of

coal

Current import

price(USD/ton)

Current import

price(thousand

VND/ton)

Current sale

price(thousan

d VND/ton)

Expected price

(thousand/ton)

Sources: VIRAC, TKV

Types of

coal

Current export

price(USD/ton)

Current export

price(thousand

VND/ton)

Current sale

price(thousand

VND/ton)

Expected price

(thousand/ton)

Sources: VIRAC, TKV

Selling price of coal to cement, fertilizer and

paper industry


2.2 Coal industry in Vietnam– 2.2.11 Price movement


PURPOSE

61

2 Industry overview

2.3 Five forces analysis and SWOT analysis

Content

62

Sources: VIRAC, MIT

5 Forces analysis

1. Supplier power


2.3. Five forces analysis and SWOT analysis

Thousand tons

• Coal from Red river basins are considered good quality, valuable for

steelmaking, thermal power, cement, chemicals,

Coal reserves in Vietnam by region, 2015


PURPOSE

63

2. Threat of new entry

3. Buyer power

4. Competitive rivalry

5. Threat of substitution

6. Threat of industrial revolution 4.0


PURPOSE



64

1. Strengths

2. Weakness

3. Opportunites


PURPOSE



65

4. Threats


PURPOSE



66

2 Industry overview

2.4 Coal industry planning and forecasts

Content

67

Accordingly, in the coming time, the coal industry will reduce both capital demand and

output.

Adjustments include:


2.4 Coal industry planning and forecasts - Planning


PURPOSE

68

No. Coal consumption 2020 2025 2030

Forecasts for coal consumption

According to experts in the industry, the coal sector planning is currently considered unrealistic and low feasibility, due to:THE CONTENT IS INTENTIONALLY REMOVED FOR DEMO

PURPOSE


2.4 Coal industry planning and forecasts - Planning

69

Content

3 Enterprises analysis

3.1 Introduction of enterprises


70

Company name LogoTotal asset

(Billion VND)

Revenue

(Billion VND)General information

Cao Son coal

Coc Sau coal

Vang Danh coal

Deo Nai coal

Ha Tu coal

3. Enterprise analysis

3.1. Introduction of enterprises


PURPOSE

71

Company name LogoTotal asset

(Billion VND)

Revenue

(Billion

VND)

General information

Ha Lam coal

Mong Duong coal

Nui Beo coal

Mien Trung coal


3.1. Introduction of enterprises


PURPOSE

72

Content

3 Enterprises analysis

3.1 Introduction of enterprises


73

Billion VND


3.2. Financial analysis

Sources: VIRAC

Revenue and revenue growth 2015 - 2016• Most of the coal businesses in the group selected for analysis have the

revenue reduced in 2016,


PURPOSE

74

• The companies in the group have low gross profit margin because the output completely

depends on the parent company TKV while the cost of mining is increasing.Billion VND

Billion VND

Gross profit and gross profit margin, 2016

Sources: Virac, FS of companies

Sources: Virac, FS of companies

Cost of goods sold and turnover of coal

enterprises in 2016




PURPOSE

75

Billion VND

Firms in the group have very low cost of goods sold,

Sources: VIRAC

Cost of sale and ratio of cost of sales/revenue of coal businesses in 2016




PURPOSE

76

Billion VND

• enterprise cost management is very high,

Sources: VIRAC

Enterprise cost management and ratio of ECM/revenue of coal businesses in 2016




PURPOSE

77

Billion VND

Sources: VIRAC

Asset structure of coal enterprises, 2016




PURPOSE

78

Billion VND

• Currently, most of the on-surface mining enterprises tend to shift to investment to prepare for underground mining.

Sources: VIRAC

The debt structure of the coal enterprises, 2016




PURPOSE

79

• Indicators to measure asset efficiency in the group are

relatively low because business activities depend heavily

on the parent company.

Sources: VIRAC

Sources: VIRAC

Coefficient of solvency, 2016

Effective use of assets, 2016




PURPOSE

80

• 2016 is considered the most difficult year in 21 years of founding

the Group.

Billion VND

Sources: VIRAC

Sources: VIRAC

Performance effectiveness, 2016

Profit- after-tax, 2016




PURPOSE

Khuyến cáo sử dụng

81

Khuyến cáo sử dụng:

Bản báo cáo này được thực hiện bởi Công ty Cổ phần Nghiên cứu Ngành và Tư vấn Việt Nam (VIRAC), chỉ cung cấp những thông tin tổng quan về ngành

và phân tích doanh nghiệp. Mọi thông tin, nhận định và dự báo và quan điểm trong báo cáo này được dựa trên những nguồn dữ liệu đáng tin cậy và dựa

trên sự cẩn trọng tối đa tại thời điểm viết báo cáo. Tuy nhiên do các nguyên nhân chủ quan và khách quan từ các nguồn thông tin công bố, VIRAC không

đảm bảo về tính xác thực của các thông tin được đề cập trong báo cáo phân tích và không chịu bất kỳ một trách nhiệm nào đối với tính chính xác của

những thông tin được đề cập đến trong báo cáo này, cũng như không chịu trách nhiệm về những thiệt hại đối với việc sử dụng toàn bộ hay một phần nội

dung của bản báo cáo. Những quan điểm và nhận định được đề cập trong báo cáo có thể được thay đổi, cập nhật mà không cần báo trước. Bản báo cáo

này có bản quyền và là tài sản của Công ty Cổ phần Nghiên cứu Ngành và Tư vấn Việt Nam (VIRAC). Nghiêm cấm mọi hành vị sao chép, sửa đổi, in ấn mà

không có sự cho phép bằng văn bản của VIRAC.

MỌI THÔNG TIN CHI TIẾT XIN ĐƯỢC LIÊN HỆ:

CÔNG TY CỔ PHẦN NGHIÊN CỨU NGÀNH VÀ TƯ VẤN VIỆT NAM

Tầng 6, tòa nhà Anh Minh, 36 Hoàng Cầu, Phường Ô Chợ Dừa, Quận Đống Đa, Hà Nội

Website: http://virac.com.vn/

Email: [email protected] | Số điện thoại: +84 463289520

http://virac.com.vn/

mailto:[email protected]

Thank you !

82

coal report in q1/2018 - virac · report summary 4 • in the past five years, coal production has...

Documents