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Vietnam fails to export 2 mil mt of coal to China due to technical barriers

Hanoi — Vietnam was unable to export 2 million mt of coal to China this year asthe latter set strict specification for mercury, arsenic, phosphoric, chlorineand fluorine content in imported coal, according to a Vietnam Ministry ofIndustry and Trade's letter obtained by S&P Global Platts Tuesday.

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Vietnam National Coal-Mineral Industries Holding Corp. Ltd., orVinacomin, had planned to export around 2 million mt of coal to China from itsUong Bi-Vang Danh coal mines in the northern province of Quang Ninh, which hascalorific value ranging from 5,050 Kcal/kg to 5,700 Kcal/kg and maximum 35%ash content under Vietnam's 2015 specifications.

On December 2, 2016, the Vietnamese government had given permission toVinacomin and the Northeast Corp. to export 4.05 million mt of coal in 2017,the ministry said.

Under the approval, Vinacomin was to export 4 million mt of coal: 2million mt of Uong Bi-Vang Danh coal and 2 million mt of coal with calorificvalue ranging from 6,700 Kcal/kg to 7,950 Kcal/kg and maximum 19% ash content.

The Northeast was allowed to export 50,000 mt of high-quality coal withcalorific value ranging from 6,700 Kcal/kg to 7,950 Kcal/kg and maximum 19%ash content.

In October, Vinacomin and Northeast announced that they would be able toexport over 2.03 million mt of coal this year, just half of the permittedvolume.

Tests have shown that the Vietnamese coal has failed to meet the Chineserequirements to be able to penetrate the China market. As a result, Vinacominis expected to have stockpile of 2.5 million mt of the Uong Bi-Vang Danh coalas of end-2017, the ministry said.

Vinacomin is looking for buyers from Thailand and South Korea to exportthe Uong Bi-Vang Danh coal in 2018.

For the next year, the ministry has proposed the central government toallow Vinacomin and Northeast to export 4.05 million mt of coal, the same astheir 2017 target.

The ministry has also proposed the central government to allow Vinacominto sign long-term contracts with Japanese buyers to sell high-quality coaluntil 2025 as these contracts will help Vinacomin in securing more Japaneseloans for its coal and power projects. Currently, Vinacomin is permitted tosign contracts to export coal to Japan until 2020.

In the first 11 months, Vietnam exported 1.98 million mt of coal, nearly106% up on the year, customs data showed last week. Japan was the biggestbuyer during the period, rising 80% on the year with 906,477 mt of coal. Theshipments to China were just 16,240 mt of coal during January-November, up4.9% year on year.

--Staff, newsdesk@spglobal.com

--Edited by Pankti Mehta, pankti.mehta@spglobal.com