Vietnamese cement companies unhappy with coal prices

According to Thanh Nien News, cement companies in Vietnam have had enough of unreasonable pricing and poor quality coal. They claim that transportation costs charged by the Vietnam Coal and Minerals Group (TKV) are three times higher than they should be, and that coal does not meet regulations.

Complaints
The complaint regarding transportation costs is that to transport cement across the same distance as the coal travels to the cement plants costs one third of what TKV charge. Cement manufacturers therefore cannot reason why coal costs are so much higher. They put the additional combined cost incurred (and therefore profit lost) at approximately VND350 billion p.a. (US$18.9 million).

A further complaint is that the humidity of the coal sent to cement manufacturers is 3% higher than the regulated 8.5%, which results in manufacturers having to purchase extra coal. Nguyen Van Kien of Cement X18 Factory estimates the cost of this to run to VND100 billion across the Vietnamese cement industry.

VCA speaks out
Nguyen Van Thien, chairman of the Vietnam Cement Association, has added his weight to the argument, asserting that cement manufacturers are paying the equivalent of US$5.4 million more than they ought to be. He claims that TKV is abusing its position by forcing companies to accept its higher costs, and has been doing so for many years.

Repercussions
Other cement manufacturers have come forward despite fears that TKV would punish them with late delivery of goods, which would cost manufacturers billions of dong in lost production. Nguyen Thi Yen, chairwoman of Huu Nghi Cement Joint-stock Company, claims that when her company switched to a different coal supplier, TKV asked them to pay off debt of VND15 billion within a week as punishment. According to the Thanh Nien report, once the debt was paid off, TKV asked for interest at 97% p.a.

Outcome?
It is reported that the Association filed a similar complaint in 2008, which is yet to result in any action being taken.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/18012010/vietnamese_cement_companies_unhappy_with_coal_prices/