COAL REPORT IN Q1/2018

Transcription

1 COAL REPORT IN Q1/2018 1

2 Content Abbreviations 3 Report summary 4 1. Business Environment Macroeconomic situation Legal framework Industry Overview Global situation of coal industry Mining Consumption Coal industry in Vietnam History of coal industry in Vietnam Definition and classification Value chain of coal industry Industry size and characteristics Situation of coal mining and production Coal mining method Consumption Import Export Price movement Five Forces analysis and SWOT analysis Coal industry planning and forecasts Enterprises analysis Introduction of enterprises Financial analysis 2

3 Abbreviations MONRE Ministry of Natural Resources and Environment PAT Profit after tax CNCA China National Coal Association SBV State Bank of Vietnam ECM Enterprise Cost Management PVN PetroVietnam COS Cost of sales SB Standard Base CPI Consumer Price Index GDVC General Department of Vietnam Customs LLC Limited Liability Company IS Industry standard JSC Joint Stock Company GSO General Statistics Office of Vietnam NR Net revenue VNS Vietnam Standard CI Commercial Investment TKV Vietnam National Coal and Mineral Industries Group EIA Energy Information Adminstration PC People s Committee EVN Electricity of Vietnam VICEM Vietnam Cement Industry Corporation GDP Gross domestic product VIRAC VIETNAM INDUSTRY RESEARCH AND CONSULTANCY IEA International Energy Agency 3

4 Report summary 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. 4

5 Report summary 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. 5

6 Content 1. Business Environment 1.1 Macroeconomic situation 1.2 Legal framework 6

7 1. Business environment 1.1 Macroeconomic situation GDP in 2017 is estimated to increase by 6.81% compared to 2016, % GDP growth rate by quarters, Sources: VIRAC, GSO Contribution structure of mining industry to GDP, industry in 2017 has decreased considerably Mining and processing Sources: VIRAC, Sources 7

8 1. Business environment 1.1 Macroeconomic situation Consumer price index (CPI) in 2017 has a lot of changes. Monthly CPI fluctuations, Sources: VIRAC, GSO VND/CNY exchange rate In 2017, the VND/CNY exchange rate tends to stabilize and increase strongly at the beginning of the second half of Sources: VIRAC, SBV 8

9 1. Business environment 1.1 Macroeconomic situation Electricity consumption per capita of Vietnam, kwh/person VND/ kwh Average electricity price, July/2007- December/2017 Electricity prices in Vietnam are quite low compared to other countries in the Asia-Pacific region. Sources: VIRAC, Worldbank Sources: VIRAC, EVN 9

10 Content 1. Business Environment 1.1 Macroeconomic situation 1.2 Legal framework 10

11 1. Business environment 1.2 Legal framework Decision No / QD-TTg of the Prime Minister dated December/12 th /2017 approves the Project of restructuring Vietnam National Coal and Mineral Industries Group from 2017 to Specifically: Decision No / QĐ-TTg dated August/24 th /2017 of the Prime Minister adjusts and supplements some articles of Decision No. 60 / QD-TTg on the planning. 11

12 1. Business environment 1.2 Legal framework 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

13 1. Business environment 1.2 Legal framework The Ministry of Industry and Trade promulgated Circular No. 13/2016 / TT-BCT dated July/11 th /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. Resolution No. 1084/2015 / UBTVQH13 dated December/10 th /2015 of the Standing Committee of the National Assembly on the tariff rates of natural resources resources is effective from July/1 st /2016. No, TARIFF RATES OF NATURAL RESOURCES Groups, types of natural resources Tariff rates (%) Sources: VIRAC, MONRE 13

14 1. Business environment 1.2 Legal framework The Prime Minister issued Directive No. 21 / CT-TTg dated August/26 th /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,

15 1. Business environment 1.2 Legal framework 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 15

16 Content 2 Industry overview 2.1 Global situation of coal industry Mining Consumption 16

17 2. Industry overview 2.1 Global situation of coal industry Mining Consumption Coal is essential for manufacturing, especially in the energy sector. Million tons Global coal production, e Sources: VIRAC, BP Statistical Review In 2017, the global coal production situation tends to increase sharply compared to The reasons for the reversal of coal production activity in 2017 include: 17

18 2. Industry overview 2.1 Global situation of coal industry Mining Consumption Global coal reserves Coal reserves of the world in 2016 Billion tons Sources: VIRAC, BP statistical review Thermal coal reserves of the world in 2016 Billion tons Sources: VIRAC, Platts 18

19 2. Industry overview 2.1 Global situation of coal industry Mining Consumption Coal production is not similar by region: Million tons Coal production by regions, Million tons Top 10 countries produce coal by output, 2016 Sources: VIRAC, BP Statistical Review In 2016, China led the world with coal production of Sources: VIRAC, BP Statistical review 19

20 2. Industry overview 2.1 Global situation of coal industry Mining Consumption Coal production by product, e Million tons Coke (fuel) production in the world dropped by 1.6% in 2015, Sources: VIRAC, IEA Structure of coal production by product, 2016e Sources: VIRAC, IEA 20

21 2. Industry overview 2.1 Global situation of coal industry Mining Consumption Million tons Global coal consumption, Change of coal demand by regions, Sources: VIRAC, BP Statistical Review Sources: VIRAC, BP Statistical Review In 2016, coal consumption will continue to fall by 1.7% compared to 2015, 21

22 2. Industry overview 2.1 Global situation of coal industry Mining Consumption In 2016, China remained the world leader in coal consumption Million tons Top 11 countries consume coal by output, 2016 Coal consumption by sectors, f Sources: VIRAC, BP Statistical Review Electricity generation accounts for 43.2% of global coal consumption in 2012 Sources: VIRAC, EIA 22

23 2. Industry overview 2.1 Global situation of coal industry Mining Consumption Consumption of coal by types in 2015 Consumption of thermal coal Sources: VIRAC, IEA Consumption of coke (fuel) Consumption of lignite 23

24 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 24

25 2. Industry overview 2.2 Coal industry in Vietnam History of coal industry in Vietnam Vietnam's coal industry has been established and has developed over 120 years. 25

26 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 26

27 2. Industry overview 2.2 Coal industry in Vietnam Definition and classification Depending on the heat generation, carbon content and ash content, coal is divided into many types such as coal, lignite, anthracite, half anthracite, etc. 27

28 2. Industry overview 2.2 Coal industry in Vietnam Definition and classification There are five major types of coal in Vietnam: anthracite coal, coke (fuel), peat, long flame coal and lignite. 28

29 2. Industry overview 2.2 Coal industry in Vietnam Definition and classification Long flame coal: Lignite: 29

30 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 30

31 2. Industry overview 2.2 Coal industry in Vietnam Value chain of coal industry Value chain of coal industry Input Mining Transportation Consumption 31

32 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 32

33 2. Industry overview 2.2 Coal industry in Vietnam Industry size and characteristics Characteristics of Vietnam s coal industry Vietnam's coal industry is still limited, complex geological conditions. Number of enterprises and laborers in the coal industry, People Sources: VIRAC, GSO Million VND Revenue and profit of the coal industry, Sources: VIRAC, GSO 33

34 2. Industry overview 2.2 Coal industry in Vietnam Industry size and characteristics Total investment capital and fixed assets of the coal industry, Billion VND Sources: VIRAC,GSO The total number of workers in TKV in 2016 was thousand, decreasing by about 4 thousand people compared to the same period in

35 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 35

36 2. Industry overview 2.2 Coal industry in Vietnam Situation of coal mining and production Total reserves and resources of coal are estimated at billion tons by December/31 st /2015 Coal reserves and resources by types, 2016 Thousand tons Sources: VIRAC, MIT Clean coal mining output, e Million tons Sources: VIRAC, MIT, GSO 36

37 2. Industry overview 2.2 Coal industry in Vietnam Situation of coal mining and production Production cost of coal, F Firstly, due to the impact of the financial crisis and the world economic recession, the demand for coal has decreased gradually Thousand VND/ton Secondly, due to the availability of coal reserves with favorable conditions for mining and low prices have been exhausted, Sources: VIRAC, TKV 37

38 2. Industry overview 2.2 Coal industry in Vietnam Situation of coal mining and production 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. 38

39 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 39

40 2. Industry overview 2.2 Coal industry in Vietnam Coal mining method Process of mining coal on the surface Advantages of the method to mine coal on the surface: Disadvantages 40

41 2. Industry overview 2.2 Coal industry in Vietnam Coal mining method Underground mining 41

42 2. Industry overview 2.2 Coal industry in Vietnam Coal mining method Factors limiting mechanization in coal mining in Vietnam 42

43 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 43

44 2. Industry overview 2.2 Coal industry in Vietnam Consumption Coal consumption increased sharply in the period from 2012 to 2015 as many thermal power station which was coal-operating were put into operation, Million tons Consumption of coal in Vietnam, Structure of coal consumption, 2017 Sources: VIRAC, MIT, TKV Sources: VIRAC, MIT, TKV 44

45 2. Industry overview 2.2 Coal industry in Vietnam Consumption Vietnam National Coal and Mineral Industries Group is the leading coal mining, consumption and export company with stable revenue of VND trillion per year. Billion VND Business result of TKV, The business performance of TKV has improved markedly in 2017 due to some main reasons: Sources: VIRAC, TKV 45

46 2. Industry overview 2.2 Coal industry in Vietnam Consumption Coal consumption of electricity industry Power planning VII which adjust coal provision in the coming time Year Nguồn: VIRAC 46

47 2. Industry overview 2.2 Coal industry in Vietnam Consumption Coal consumption of cement industry Coal output provided for some cement plants, 2015 Ton Sources: VIRAC, VICEM 47

48 2. Industry overview 2.2 Coal industry in Vietnam Consumption Coal consumption of steel industry Types of coal Nguồn: VIRAC 48

49 2. Industry overview 2.2 Coal industry in Vietnam Consumption 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. 49

50 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 50

51 2. Industry overview 2.2 Coal industry in Vietnam Import Vietnam has just started importing coal since 2013 with 2.27 million tonnes of coal Thousand tons Output and import turnover of coal, Million USD Million tons Sources: VIRAC, GDVC Trade balance of Vietnam coal industry with China s and the world s, coal demand for the metallurgical and thermal, cement industries is growing, forecast of coal import to Vietnam will increase sharply in the next years. Sources: VIRAC, GDVC 51

52 2. Industry overview 2.2 Coal industry in Vietnam Import Coal imports have been surged for many years due to distance factors, Thousand tons Coal imports, Import structure of coal by output, 2017 Sources: VIRAC, GDVC Sources: VIRAC, GDVC 52

53 2. Industry overview 2.2 Coal industry in Vietnam Import Import structure of coal by value, 2017 Coke still accounts for a large share of coal imports with Sources: VIRAC, GDVC 53

54 2. Industry overview 2.2 Coal industry in Vietnam Import Top 10 coal importing enterprises, 2017e Top 10 exporting enterprises of coal to Vietnam, 2017e Sources: VIRAC, GDVC Nguồn: VIRAC, GDVC Ha Tinh The two largest importing enterprises in 2017 are FORMOSA 54

55 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 55

56 2. Industry overview 2.2 Coal industry in Vietnam Export Vietnam produces fine coal but the price is based on two-party contracts, not based on the market prices 56

57 2. Industry overview 2.2 Coal industry in Vietnam Export Million tons Output and export turnover of coal, BIllion USD 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. Sources: VIRAC, GDVC Structure of export market according to output of Vietnam, 2017 Sources: VIRAC, GDVC 57

58 Content 2.2 Coal industry in Vietnam History of coal industry in Vietnam Consumption Definition and classification Import Value chain of coal industry Export Industry size and characteristics Price movement Situation of coal mining and production Coal mining method 58

59 2. Industry overview 2.2 Coal industry in Vietnam Price movement Adjusting coal prices for electricity industry 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. Sources: VIRAC, TKV, EVN Selling price of coal for electricity production (Hon Gai-Cam Pha coal since October/1 st /2017) Types of coal Unit Selling price Sources: VIRAC, TKV, EVN 59

60 2. Industry overview 2.2 Coal industry in Vietnam Price movement Selling price of coal to individual households Selling price of coal to cement, fertilizer and paper industry Types of coal Current export price(usd/ton) Current export price(thousand VND/ton) Current sale price(thousand VND/ton) Expected price (thousand/ton) Types of coal Current import price(usd/ton) Current import price(thousand VND/ton) Current sale Expected price price(thousan (thousand/ton) d VND/ton) Sources: VIRAC, TKV Sources: VIRAC, TKV 60

61 Content 2 Industry overview 2.3 Five forces analysis and SWOT analysis 61

62 2. Industry overview 2.3. Five forces analysis and SWOT analysis 5 Forces analysis 1. Supplier power Coal reserves in Vietnam by region, 2015 Thousand tons Sources: VIRAC, MIT Coal from Red river basins are considered good quality, valuable for steelmaking, thermal power, cement, chemicals, 62

63 2. Industry overview 2.3. Five forces analysis and SWOT analysis 2. Threat of new entry 3. Buyer power 4. Competitive rivalry 5. Threat of substitution 6. Threat of industrial revolution

64 2. Industry overview 2.3. Five forces analysis and SWOT analysis 1. Strengths 2. Weakness 3. Opportunites 64

65 2. Industry overview 2.3. Five forces analysis and SWOT analysis 4. Threats 65

66 Content 2 Industry overview 2.4 Coal industry planning and forecasts 66

67 2. Industry overview 2.4 Coal industry planning and forecasts - Planning output. Accordingly, in the coming time, the coal industry will reduce both capital demand and Adjustments include: 67

68 2. Industry overview 2.4 Coal industry planning and forecasts - Planning Forecasts for coal consumption No. Coal consumption According to experts in the industry, the coal sector planning is currently considered unrealistic and low feasibility, due to: 68

69 Content 3 Enterprises analysis 3.1 Introduction of enterprises 3.2 Financial analysis 69

70 3. Enterprise analysis 3.1. Introduction of enterprises Company name Logo Total asset (Billion VND) Revenue (Billion VND) General information Cao Son coal Coc Sau coal Vang Danh coal Deo Nai coal Ha Tu coal 70

71 3. Enterprise analysis 3.1. Introduction of enterprises Company name Logo Total asset (Billion VND) Revenue (Billion VND) General information Ha Lam coal Mong Duong coal Nui Beo coal Mien Trung coal 71

72 Content 3 Enterprises analysis 3.1 Introduction of enterprises 3.2 Financial analysis 72

73 3. Enterprise analysis 3.2. Financial analysis Most of the coal businesses in the group selected for analysis have the revenue reduced in 2016, Revenue and revenue growth Billion VND Sources: VIRAC 73

74 3. Enterprise analysis 3.2. Financial analysis 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 Cost of goods sold and turnover of coal enterprises in 2016 Sources: Virac, FS of companies Gross profit and gross profit margin, 2016 Billion VND Sources: Virac, FS of companies 74

75 3. Enterprise analysis 3.2. Financial analysis Billion VND Cost of sale and ratio of cost of sales/revenue of coal businesses in 2016 Sources: VIRAC Firms in the group have very low cost of goods sold, 75

76 3. Enterprise analysis 3.2. Financial analysis Billion VND Enterprise cost management and ratio of ECM/revenue of coal businesses in 2016 Sources: VIRAC enterprise cost management is very high, 76

77 3. Enterprise analysis 3.2. Financial analysis Billion VND Asset structure of coal enterprises, 2016 Sources: VIRAC 77

78 3. Enterprise analysis 3.2. Financial analysis Currently, most of the on-surface mining enterprises tend to shift to investment to prepare for underground mining. The debt structure of the coal enterprises, 2016 Billion VND Sources: VIRAC 78

79 3. Enterprise analysis 3.2. Financial analysis Coefficient of solvency, 2016 Sources: VIRAC Effective use of assets, 2016 Indicators to measure asset efficiency in the group are relatively low because business activities depend heavily on the parent company. Sources: VIRAC 79

80 3. Enterprise analysis 3.2. Financial analysis 2016 is considered the most difficult year in 21 years of founding the Group. Performance effectiveness, 2016 Sources: VIRAC Billion VND Profit- after-tax, 2016 Sources: VIRAC 80

81 Khuyến cáo sử dụng 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: Số điện thoại:

82 Thank you! 82