Decision No. 403/QD-TTg dated March 14, 2016 of the Prime Minister on approving the adjusted master plan for Vietnam’s coal industry development to 2020 and vision towards 2030

THE PRIME MINISTER

Decision No. 403/QD-TTg dated March 14, 2016 of the Prime Minister on approving the adjusted master plan for Vietnam’s coal industry development to 2020 and vision towards 2030

Pursuant to the Law on Governmental Organization dated June 19, 2015;

Pursuant to the Government’s Decree No. 92/2006/ND-CP on compilation, approval and management of the master plan for socio-economic development dated September 07, 2006;

Pursuant to the Government’s Decree No. 04/2008/ND-CP  dated January 11, 2009 amending and supplementing a number of articles of the Government’s Decree No. 92/2006/ND-CP on proposal, approval and management of the master plan for socio-economic development dated September 07, 2006;

Pursuant to the Prime Minister’s Decree No. 89/2008/QD-TTg on strategies for developing Vietnam s Coal industry to 2015 and orientations towards 2025;

At requests of Ministry of Trade and Industry,

DECIDES

Article 1.To approve the adjusted master plan for Vietnam’s coal industry development to 2020 and vision towards 2030 shall be presented as follows:

I. STANDPOINTS

1. Develop coal industry on the principle of effective and economical exploitation, processing and use of coal resources; ensure the national energy security and reasonable import-export on the principle of reducing export and exporting only coal types that Vietnam has not yet demanded; develop  management plans and regulatory measures in line with the State-managed market mechanism  and Vietnam’s international commitments.

2. Intensify coal resources investigation and exploration; quantify domestic coal resources to estimate the reliable coal resources that serve the sustainable development of coal industry.

3. Promote outward investment and trading in coal to meet the need for the socio-economic development.

4. Stabilize the production and consumption of coal to satisfy the long-term domestic demands; diversify methods of investment and trading in coal industry and promote coal industry development to catch up with the pace of development of other industries. Uphold domestic capacities (capital, design, fabrication….) and international cooperation in research and development and application of technological advances to coal exploration, mining and preparation; apply technical solutions and management to reduce coal losses during mining processes; and focus on environmental protection, HSE, natural resources management and risk management.

5. Apply State-managed market mechanism in line with the global coal market.

6. Develop the coal industry in the connection with surrounding environment protection and improvisation; promote tourism and limit negative impact on cultural sanctuaries; make a significant contribution to the socio-economic development; strengthen national security and defense and ensure coal production safety.

II. OBJECTIVES

1. Purposes:

To develop Vietnam’s coal industry into a competitive industry applying technological advances to coal exploration, mining, and preparation, processing and trading; to ensure the sufficiency of coal resources to meet the domestic consumption demand, especially for thermal power industry.

2. Objectives:

a) With regard to coal exploration

- Dong Bac Corporation

+By the end of 2020: Complete coal explorations to the depth of -300 m or under -300 m to ensure that  coal reserves and resources are sufficient for the consumption up to 2025; to upgrade 01 billion ton of coal from the level 333, 334a and 334b to level 222 and 332.

+ Complete the exploration to the coal beds by the end of 2025 to ensure  that  coal reserves and recourses are sufficient meet the demands  during the period from 2021 to 2030; upgrade the level of the remaining resources from 333, 334a and 334b to 222 and 332.

- Red River Delta coal basin:

+Complete the coal exploration in Nam Thinh and part of Nam Phu II, Tien Hai district, Thai Binh province for the purposes of making and executing pilot projects.

+ Conduct extensive exploration as the basis for development of large scale coal mines according to the coal resources assessment of Red River Delta coal basin and pilot project results.

b) With coal exploitation

Probable commercial coal yields of  Vietnam’s coal industry: - 2016: approximately 41-44 million tons
- 2020: 47-50 million tons
- 2025:  51-54 million tons
- 2030:  55-57 million tons
- 2021-2030: conduct pilot projects in Red River Delta coal basin as the basis  for the investment in large-scale coal mines ; achieve the commercial coal yield of from 0.5-1.0 million tons by the year 2030.

The overall commercial coal yield may be adjusted by period to meet the market needs (for both export and import) to ensure the economy effectiveness.

c) With regard coal losses:

Reduce coal losses due to underground mining processes to approximately 20% by 2020 and under 20% for 2020 onwards; and reduce coal losses due to open-cut mining processes to approximately 5% by 2020 and under 5% in 2020 onwards.

a) With regard to coal preparation:

Finish the construction of coal preparation plants in Quang Ninh to optimize the transport and preparation of coal according to the urban planning, transport and port planning in coal regions by 2020. From 2020 onwards, diversify coal products to meet the market needs.

dd) With regard to environmental protection

Satisfy all environmental standards in coal mine regions by 2020.

e) With regard to coal markets

Focus on meeting domestic demands in combination with reasonable import and export.

III.MASTER PLAN CONTENTS

1. Projections of coal demands

Domestic coal demands are projected by period as follows:

Unit: million ton

2. Planning zones

a) Coal exploration, mining and preparation zones:

- Dong Bac coal basin: coal-bearing areas mainly located in Quang Ninh and parts of Bac Giang and Hai Duong provinces The majority of anthracite coal is distributed in this basin and shall be intensively mined by the year 2030.

- Red River Delta coal basin: coal-bearing areas mainly located in Thai Binh, Hung Yen and Nam Dinh provinces. This basin contains a vast of sub-bituminous coal resources but the frequency of coal exploration is limited by difficult mining conditions.

- Inland coal mines: consists of 6 coal mines ( namely Nui Hong, Khanh Hoa, Lang Cam, Na Duong, Khe Bo and Nong Son) managed and exploited by members of  Vietnam Coal and Minerals Corporation (Vinacomin) and Vietnam Steel Corporation. The aforesaid coal mines contain small reserves and resources and are mainly exploited by open-cut mining technique; most of coal resources are located in Quan Trieu-Nui Hong and Lang Son.

b) Medium and small exploration, mining and preparation zones

- Local mines: more than 100 coal mines with small resources and reserves, sparsely distributed in multiple provinces; low industrial value and exploration frequency.

- Peat mines: more than 216 peat mine all over the country, large expected peat resources, mainly distributed in Nam Bo, low exploration frequency.

c) Areas where mining is prohibited or temporarily prohibited:  People’s Committee of provinces and centrally-affiliate cities (hereinafter referred to as “People’s Committee of provinces”) shall cooperate with relevant authorities to zone and request the Prime Minister to approve the zoning under laws on minerals.

3. Total coal resources and reserves

a) The total coal resource and reserve are estimated to be approximately 48.88 million tons by December 31, 2015;
where:
Coal reserve:  2.26 billion tons
Coal resource: 46.62 billion tons
Peat: 0.34 billion ton
b) The total coal resource and reserve under the master plan are about 3.05 billion tons, where peat, coal reserves and resources occupying 1.22, 1.83 and 0.06 billion tons, respectively. Refer to the Appendix I for more information.

4. Exploration planning

Orientations

Focus on exploring and upgrading the existing coal resources to ensure the sufficiency of coal resources according to the master plan and ensure the exploration must be conducted in advance.

b) Specific orientations

-  From now to 2020

+ Dong Bac coal basin: complete the exploration of coal to the depth of -300 m, including new coal mines such as Bao Dai, Dong Trieu-Pha Lai, Cuoc Be, Dong Quang Loi and other areas to the depth of under -300 m.

+ Red River Delta coal basin: Complete coal exploration in Nam Thinh, Tien Hai district, Thai Binh province and explore Nam Phu II coal mine in Tien Hai district, Thai Binh province for the purpose of  pilot project execution.

+ Inland coal mines: Continue to explore, renovate and assess coal reserves of Nui Hong and Khanh Hoa mines.

+ Local coal mines: Continue to explore, renovate and assess coal reserves of local mine within the administration of local government..

+ Peat mines: Continue to explore, renovate and assess coal reserves of peat-bearing areas.

+ Explore to ensure the coal reserves for the consumption up to 2020.

-  For period of 2021-2030

+ Dong Bac coal basin: Complete the exploration to coal beds to ensure the sufficiency of coal reserves and resources for the consumption of up to 2030 and afterwards.

+ Red River Delta coal basin: Complete the exploration of Nam Phu II mine, Tien Hai district, Thai Binh province (for pilot projects) Conduct extensive exploration of coal mines for the purposes of  industrial-scale mine development and/or pilot project execution (where necessary) according to coal surveys, overall assessment of coal resources and results of pilot project execution.

The list of coal mine exploration proposals is presented in the Appendix IIa hereof.

The coordinate of boundaries of coal mine exploration is presented in the Appendix IIb hereof.

5. Mining planning

a) Orientations

- Combine small-scale mines into a large scale mine; stabilize and increase coal yields.

- Take use of internal coal mine waste dumps.

- Invest in pilot projects in Red River Delta coal basin.

b) Specific orientations

-  From now to 2020

+ Dong Bac Coal Basin:

. Renovate, expand and increase the mining capacity of 9 coal mine projects (in Cam Pha : 4 projects; Hon Gai: 4 projects and Uong Bi: 1 project)

. Invest in 41 new coal mine projects (in Cam Pha : 17 projects; Hon Gai: 7 projects and Uong Bi: 17 projects)

+ Inland coal mines: Renovate and expand opencast mines by applying technological advances; expand and increase the mining capacity of Na Duong mine.

+ Peat mines: Invest in renovation, expansion and new construction of coal mines for production of fertilizers, chemicals, etc.

+ Local coal mines: Invest in renovation, expansion and new construction of coal mines, appoint qualified entities to conduct coal exploration and coal mining.

+ Invest in existing coal mines.

-  For period of  2021-2030

+ Dong Bac Coal Basin:

. Renovate, expand and increase the mining capacity of 9 coal mine projects ( in Cam Pha : 7 projects and Uong Bi: 2 projects)

. Invest in 29 coal mine projects ( in Cam Pha : 4 projects; Hon Gai: 6 projects and Uong Bi: 19 projects)

+ Inland coal mines: Invest in new projects for coal mining beneath coal layers exploited by Khanh Hoa opencast mine exploitation project; invest in projects for expansion of Nui Hong mining capacity.

+ Peat mines: Invest in renovation, expansion and new construction of coal mines for production of fertilizers, chemicals, etc.

+ Red River Delta coal basin: Invest in pilot exploitation projects with the application of underground mining and coal gasification; and/or execute extra pilot projects(where necessary).

+ Invest in existing coal mine projects.

The list of operating coal mine projects is presented in the Appendix IIIa hereof.

The coordinate of boundaries of operating coal mines is presented in the Appendix IIIb hereof.

6. Coal preparation and processing planning

Orientations

- Construct centralized and uniform coal preparation plants; gradually reduce small and separate coal preparation plant clusters.

- Diversify coal products for thermal power plants and the domestic consumption demand.

b) Specific orientations

-  From now to 2020

New projects for construction of the following coal preparation plants: Vang Danh 2 with the capacity of 2.0 milion tons/year; Khe Than with the capacity of 2.5 million  tons/year; Hon Gai with the capacity of 5.0  million tons/year (module 1 with the capacity of 2.5 million tons/year shall be constructed in Ha Khanh ward; Nam Cau Trang coal preparation plant  that will come into operation by the end of 2018 and shall be moved to Hon Gai coal preparation plant whose module 2 with the capacity of 2.5 million tons/year will be installed  after 2018); Khe Cham coal preparation plant with the capacity of 7.0 million tons/year; Lep My coal preparation plant with the capacity of 4.0 million tons/year.

-  For period of  2021-2030

+ Dong Bac coal basin: expand and upgrade the capacity of Khe Than coal preparation plant from 2.5 million tons/year to 5.0 million tons/year.

+ Red River Delta coal basin: Invest in coal processing plants according to mining techniques, coal yield mad consumption demand.

+ Invest in existing coal preparation plants

The list of operating coal preparation plants shall be presented in the Appendix IV hereof.

7. Coal import-export orientations

Meet the domestic consumption demand in both coal weight and type; reduce export and increase import.

8. Electricity supply planning

a) Orientations

Improve electricity supply quality to meet the electricity demand in coal industry; and consistently apply power-saving solutions.

b) Specific orientations

- Dong Bac coal basin:Renovate and upgrade the operational electricity supply system according to the schedule of mine renovation and expansion to assure the stable and safe supply of electricity for coal production; to wire the electricity grid  of 35 kV ÷220 kV and construct transformer stations of 35 kV ÷ 220 kV in new minesDouble circuits or circular circuits shall apply to underground coal pits.

- Red River Delta coal basin: Renovate and construct  electrical grids and transformer stations according to the project power demand .

9. External transportation system planning

a) Orientations

Encourage the transport by railway, conveyor or combination of  car-conveyor; reduce the use of cars to mitigate the environmental negative impact.

b) Specific orientations

-  From now to 2020

+Railway systems: renovate and upgrade existing railways, use locomotives with the capacity of greater 1,000 CV.

+ Conveyor systems:  Install 10 conveyor belts with the total length of 42.5 km

+Highway systems: Renovate, expand or construct a number of specialized routes within Uong Bi, Hon Gai and Cam Pha.

-  For period of  2021-2030

+Red River Delta coal basin: Construct a number of external transport systems according to the mining yields.

The list of external transport system shall be presented in the Appendix IV hereof.

10. Planning for ports for coal export

a) Orientations

Renovate and construct centralized port clusters with the large scale and capacity and state-of the-art coal loader application; remove old and small ports.

b) Specific orientations

-  From now to 2020

+ Uong Bi – Dong Trieu – Pha Lai

Dien Cong port: expand and upgrade the capacity (phase I) to 7.0 million tons /year, ensure the docking of barges of from 500 DWT to 2,000 DWT.Hong Thai Tay port: expand and increase the capacity (phase I) to 3.0 million tons /year, ensure the docking of barges of from 500 DWT to 2,000 DWT.

+Hon Gai:

Hong Thai Tay port: expand and dredge reaches for coal production with the capacity of 5.0 million tons/year by the end of  2018 and enable the docking of vessels of up to 2,000 DWT . After 2018, Nam Cau Trang port shall be renovated into a commodity port.

+ Cam Pha

Construct Cam pha port with the total capacity of 13.0 million tons /year, enable the docking of vessels of maximum 60,000 DWT.

-  For period of 2021-2030

+ Uong Bi – Dong Trieu – Pha Lai

Dien Cong port: expand and increase the capacity (phase II) to 13.0 million tons /year, enable the docking of barges of from 500 DWT to 2,000 DWT.

+ Red River Delta coal basin: Construct a number of ports for coal export according to the mining yields.

11. Planning for ports for coal import

a) Orientations

Construct, renovate and expand existing ports to meet the imported capacity by period in accordance with the master plan for Vietnam seaports approved by the Prime Minister.

b) Specific orientations

-  From now to 2020

Construct transshipment ports with the capacity of up to 40 million tons/year to transport coal to thermal power stations within the Mekong Delta (Duyen Hai port-Tra Vinh province) that enable the docking of vessels of up to 80,000-160,000 DWT.

-  For period of  2021-2030

+ Renovate and expand Hon Net port with the capacity of 30 million tons/year that enable the docking of vessels of up to 100,000 DWT.

+ Renovate and expand Ha Tinh port (Son Duong area) with the capacity of 35 million tons/year that enable the docking of vessels of up to 200,000 DWT.

The list of operating ports for coal import-export shall be presented in the Appendix IV hereof.

12. Mine closure planning

From now to 2020

- For Dong Bac coal basin: the Dong Bac coal basin shall be closed after the exploitation is ended and the execution of 33 proposals is completed ( where; Cam Pha : 17 proposals; Hon Gai: 8 proposals and Uong Bi:8 proposals).

- For inland coal mines: Inland coal mines shall be closed as the exploitation and proposal execution is ended

b) For period of 2021-2030

- For Dong Bac coal basin: the Dong Bac coal basin shall be closed after the exploitation is ended and the execution of 43 proposals is completed (where; Cam Pha : 15 proposals; Hon Gai: 9 proposals and Uong Bi:19 proposals).

- For inland coal mines: Inland coal mines shall be closed as the exploitation and execution of 2 proposals is ended.

The list of mine closure proposals is presented in the Appendix V hereof.

13. Investments

a) Expected investments

The total investment to 2030 is expected to be approximately 269,003 billion dong (equal to 17,934 billion dong/year)

-  From now to 2020

The total investment to 2030 is expected to be approximately 96,566 billion dong (equal to 19,313 billion dong/year), where:

+ New projects and expansion: 89,026 billion dong;

+ Production: 7,540 billion dong

-  For period of 2021-2030

The total investment is expected to be approximately 172,437 billion dong ( equal to 17,244 billion dong/year), where:

+ New projects and expansion: 146,880 billion dong;

+Production: 25,557 billion dong

b) Sources of financing:

Expected sources of financing to coal industry under the master plan include self-arranged capitals, concessional loans , commercial loans, capital mobilized in security markets and other legal sources of finance.

IV.PLANNING SOLUTIONS

1. Solutions to long-term supply of coal:

- Intensify coal exploration in Dong Bac coal basin to upgrade the coal reserve to at least -300m and determined the quantity of coal at the depth of under -300 m.

- Speed up coal survey and assessment in Red River Delta coal basin; explore Nam Thinh and Nam Phu II mine (Tien Hai district, Thai Binh province) within Red River Delta coal basin to serve the purpose of piloting projects.

- Define investment plans and schedules by project during the processes of development, appraisal and approval the local coal exploration planning in accordance with the master plan schedule.

- Arrange capital and call for investment in coal exploration and mining overseas in forms of joint-venture, share acquisition and mine purchase, etc.

- Cooperate with international coal exporters to import coal for long-term domestic demand (especially coal for thermal power generation).

- Apply natural resource advanced management methods; protect coal resources, control coal sources from the stage of exploitation, transport, preparation to trading.

2. Investment mobilization

- Mobilize investments by various methods such as financial hire-purchasing; bidding, issuing bonds or security, taking commercial loans, etc.

- Cooperate with foreign entities to execute coal mine projects where need advanced technologies that Vietnamese has not acquired (such as coal exploration beneath civil construction sites, industrial zones, water-bearing areas, etc.)

- Invest in infrastructure projects under various forms of PPP, BOT, BT, Bo, etc.

3. With regard to personnel training

Promote investment and cooperation, diversify training methods and ensure the qualified personnel for coal mine projects under this master plan.

4. With regard to Science and Technology:

- Research, develop and receive technologies transferred in terms of coal exploration, exploitation and preparation (especially underground mining techniques at the depth of under -300 m  in Quang Ninh and Red River Delta coal basins)

- Research, develop and apply technology and advanced management methods to save costs for coal exploration, exploitation, preparation, transport and trading.

- Promote intersectoral and international cooperation in research & development and application of advanced science and technology, transfer and reception of the  transferred  technology advances in terms of mining equipment, environmental protection, etc.

5. With regard to HSE, environmental protection and climate change responses:

- Invest in technology and protective equipments for the purpose of HSE such as gas detectors, fire prevention systems, warning alarms; modernize and professionalize mine rescue works.

- Boost the investment and prevent negative environmental impact by coal exploration, exploitation, preparation and trading.

- Propose climate change responses.

6. With regard to relevant policies and mechanism

- In respect of resources management: Vinacomin  and Dong Bac Corporation shall be responsible for the management, exploration and exploitation of Dong Bac and Red River Delta coal basins.

- In respect of coal market:  the coal is sold at market price.

- In respect of finance:

+ The coal industry is funded from the State’s Investment credit and part of ODA and Government’s bonds.

+ The coal survey, exploration and planning shall be funded by the State budget.

+The State shall pass proper mechanism for specific periods to promote the coal industry development and ensure the national energy security.

- In respect of personnel attraction:

The State shall release incentive policies to attract labors to coal mines, especially in underground coal mines.

Article 2. Implementation organizations

1. The Ministry of Industry and Trade shall:

a) Announce the approved master plan; direct, supervise, expedite and inspect the implementation of this master plan.

b) Update and analyze coal supply-demand curves and request the Prime Minister to supplement or adjust the master plan according to the reality,

c) Direct and formulate the detailed plan for coal regions, plans for provision of coal to thermal power stations; and coal port projects under regulations of laws.

d) Take charge of and cooperate with relevant regulatory bodies to submit proposed specific mechanism or policies for coal industry development in line with the master plan.

dd) Submit annual import-export plans; direct and provide instructions on coal import-export under provisions of laws.

2. The Ministry of National Defense shall:

Cooperate with the Ministry of Industry and Trade to provide instructions on the implementation of coal exploration and coal mining proposals to ensure the security and community order of provinces where coal mining activities are executed.

3. The Ministry of Environment and Natural Resources shall:

a) Aggregate and assess coal resources to the coal beds of Dong Bac coal basin

b) Speed up coal resources survey in Red River Delta coal basin; manage and store coal data under provisions of laws.

c) Grant permits for coal mining to ensure that projects come into operation in accordance with this master plan.

d) Zone and announce areas where minerals are sparsely distributed under provisions of laws.

4. The Ministry of Planning and Investment shall:

Take charge of and cooperate with relevant regulatory bodies to mobilize ODA for coal industry development in line with this master plan.

5. The Ministry of Transport shall be:

Update and add coal transport routes and coal transshipment ports to the master plan.

6. The Ministry of Finance shall:

Adjust, supplement or request competent authorities to promptly adjust or supplement financial policies for coal industry in line with the master plan according to the national socio-economic development in each period.

7. The Ministry of Science and Technology shall:

Formulate mechanism and policies for the purposes of encouragement and assistance in technological research and development, transfer and application to the exploitation of Dong Bac coal basin at the depth of under -300 m; effectively take use of and exploit Red River Delta coal basin.

8. The Ministry of Labor, War Invalids and Social Affairs shall:

Formulate and issue, within the competence, or request competent authorities to promptly adjust and supplement policies or mechanism for attracting labors to working in coal mines, especially in underground coal mines.

9. People’s Committees of provinces shall:

Cooperate with regulatory authorities, Vinacomin, Dong Bac Corporation and relevant agencies to effectively execute this master plan.

b) Be responsible for managing and protecting unexploited coal resources beyond the administration of  coal enterprises; cooperate with coal enterprises to manage and protect coal resources of  operating coal mines.

c) Update and adjust the relevant local government’s plans under this master plan.

d) Take charge of and cooperate with investors to conduct site clearance, relocation and evacuation processes of coal projects under provisions of laws.

dd) Intensify the inspection of compliance with laws on minerals of entities engaging in coal mining and trading within the province.

e) Take charge of zoning and request the Prime Minister to approve the areas where mining is prohibited and temporarily prohibited (hereinafter referred to as “prohibited area or temporarily prohibited area”; managing mining activities under laws of minerals.

g) Regularly update and adjust boundaries of prohibited areas or temporarily prohibited areas according to the reality. Limit the grant of permits for socio-economic development projects located in mineral zones approved by the Prime Minister.

h) Cooperate with relevant agencies to exercise rights and obligations to cultural heritage under provisions of laws on coal mining.

10. Vinacomin and Dong Bac Corporation shall:

a)Be responsible for the execution of the master plan, promote the sustainable development of coal industry; ensure the execution of proposals for coal exploration, coal mining and infrastructures in schedule; and be a focal point in coal supply to meet the domestic demand.

b) Cooperate with both domestic and overseas enterprises and organizations to research and develop mining technological solutions.

c) Research and develop mining technological solutions to prohibited areas or temporarily prohibited areas according to the reality.

d) Cooperate with relevant regulatory authorities to develop management strategies for coal exploration, mining, transport and consumption; and prevent illegal coal mining or trading.

dd) Formulate and execute proposals for mine closures under provisions of laws.

e) Submit emergency plans for climate change to the Ministry of Industry and Trade

g) Draw and conclude cooperation regulations to ensure the safety and effectiveness of the project execution under the master plan.

Article 3.This Degree takes effect on the signing date and replaces the Prime Minister’s Decree No. 60/QD-TTg on approval for the master plan strategies for developing Vietnam s Coal industry to 2020 and perspectives to 2030 dated January 09, 2012.

Article 4.Ministers,Heads of ministerial-level agencies, Heads of Governmental agencies ; Presidents of People’s Committees of provinces; President of the Member assembly, Directors assistant of Vinacomin; the President of the Dong Bac Corporation and relevant entities shall implement this Decision.

The Prime Minister

Nguyen Tan Dung

*All Appendices are not translated herein.