VIETNAM: Cement production costs rise by up to 30%

HA NOI — Recent increases in the price of electricity, coal and fuel have forced the Viet Nam Cement Industry Corporation (VINCEM) to increase cement prices by VND120,000 (US$5.8) per tonne to avoid losses, the corporation announced.

Cement production costs have increased from 22 to 30 per cent for a number of reasons, including a 15.3 per cent increase in electricity and fuel prices, the devaluation of the Vietnamese dong against the US dollar, high lending interest rates and a 40 per cent increase in coal prices which became effective at the beginning of this month.

Chairman of the Viet Nam Cement Association Nguyen Van Thien said power costs made up from 45 to 50 per cent of cement production costs.

Since the end of last year, the cement sector has been struggling with these challenging factors. This year, VINCEM would have to pay back VND3.2 trillion (US$154.6 million) in debts and Cam Pha Cement Plant, VND800 billion ($38.64 million), said Le Van Chung, VINCEM's management board chairman.

"Therefore, cement manufacturers were forced to adjust their cement prices in order to survive and pay back their debts," he said.

Chung said during the past 10 years, prices for cement made in Viet Nam were $50 per tonne which was much lower than average prices in ASEAN countries which ranged from $65 to $75 per tonne.

In the past three years, cement prices have risen by 13 -15 per cent while coal prices have doubled and fuel and electricity prices have been increased constantly.

However, one of the most serious problems was that electricity and coal sectors raised their prices while also reducing supply to only 70 per cent of the cement sector's need, causing a shortage of around 10 million tonnes of cement.

Power cuts will also lead to standstills on the cement assembly lines.

To minimise the difficulties, Chung said the corporation had instructed its members to cut production costs by saving energy.

Accordingly, cement plants had to reschedule operation of their assembly lines to take advantage of non-peak hour power costs.

VINCEM is also developing a project to use extra heat from clinker kilns to generate power at Hoang Thach and Tam Diep cement plants.

All plants under the corporation were aiming to set up this new equipment to generate more than 18 to 20 per cent of power needed for production, Chung added. — VNS