Vietnam coal supply summary

As Vietnam pursues its targets in Power Development Plan VIII, coal demand is highly likely to climb with the gradual commission of new coal thermal power plants until 2030 and start to fade out along with the exit of coal thermal plants. We expect domestic production to rise mildly in the coming years as expansion investment is already spent out. However, the mining conditions at most mines in Vietnam are very challenging to fundamentally improve the domestic supply status quo. Total cash cost is consistently mounting from the 2020 level owing to rising labour and mining costs and higher royalties. We forecast that productivity improvements will outweigh the impact of mining costs in 2023, and therefore C1 will decline by 5% year-on-year. Moreover, prices falling into the normal range will help reduce royalties.