The price of coal used in the production of cement, paper and fertiliser has increased by 20-40 percent, following a decision by the Ministry of Finance.

The sudden move, dated from April 1, resulted from a proposal by the Vietnam National Coal, and Mineral Industries Holding Corporation Limited (Vinacomin) based on increases in input prices, interest rates and the global price of coal.

Before the rise, coal on the domestic market was sold at 60 percent of the export price and coal for use in cement, paper and fertiliser production was sold at 50 percent of the export price, a coal industry source said.

This was a result of the Government's policy to curb inflation, the source said. The cost of petroleum, iron, steel furnaces and exchange rate had contributed to add about 3.5 trillion VND (167 million USD) to the cost of coal, while export taxes added another 1.3 trillion VND (61.9 million USD).

If coal prices had not increased, Vinacomin would have faced financial difficulties, a group spokesman said.

Vinacomin had introduced many technological measures to save costs, but to balance its capital investment in coal production of 15 trillion VND (714 million USD) per year, the group had to have 3 trillion VND (142 million USD) corresponding capital a year, the spokesman said.

As a matter of survival the group needed to return to profitability and to fund investment and development. About 3.5 trillion VND (167 million USD) was required, he said.

As coal prices were adjusted, the group would improve accommodation, transportation and safety equipment for mining activities.

Simultaneously, it would maintain production capacity to finance development investment and thus increase productivity.

To meet the national demand to 2015, about 60 million tonnes of clean coal would be required and Vinacomin's production target for the period was 55 million tonnes./.