Vietnam National Coal and Mineral Industries Holding Corporation (Vinacomin), the thirty years of formation and development

In continuous creation to make a breakthrough, Vinacomin is recognized with new steps forward in technological infrastructure and exploitation level, in terms of responsibility to the locality in economic growth and social security, the goal of building a green business model, sustainable development.

Outstanding and stable growth:

According to Vinacomin's report, Its total assets have grown continuously from 1.7 trillion VND in 1994 to 114 trillion VND by the end of 2023, an increase of more than 97 times compared to 1994. This shows Vinacomin's outstanding growth in scale.

Although some years the overcome decreased in comparison to the previous year due to objective reasons (market fluctuations, decreased domestic coal demand), in general, during the entire operation process since its establishment, the overcome of the Vinacomin has had outstanding and steady growth with an average growth rate of 18%/year.

Specifically, if in 1994 - the first year of establishment of Vinacomin, the total overcome of Vinacomin was only 1,845 trillion VND, then by 2023 it had reached 168.10 trillion VND, more than 91 times and increased by 166.25 trillion VND compared to 1994. The Vinacomin total overcome in the period from 1994 to 2023 reached 1.9 million billion VND, an average of 65.7 trillion VND/year. This is a particularly impressive figure, demonstrating Vinacomins growth in terms of width. In particular, coal and alumina export activities... with the highest record in two years (2010-2011) reaching over 1.5 billion USD/year have brought in a large source of foreign currency helping Vinacomin proactively pay off foreign currency debts, contributing to the overall growth of the national economy. However, since 2014, coal export output has decreased due to licensing regulations of the Ministry of Industry and Trade, but alumina export output has increased sharply. From 2014-2023, Vinacomin exported an average of 634 million USD/year and 2022 was the highest year with more than 1 billion USD.

In terms of production and business efficiency, despite many challenges such as the Asian financial crisis (1997), the global economic crisis (2008) and the COVID-19 epidemic, Vinacomin still maintained profitable production and business activities. In particular, 2022 was the year Vinacomin achieved the highest production and business results since its establishment with pre-tax profit reaching 10.6 trillion VND.

As a multi-industry economic group including Coal, minerals, electricity, industrial explosives, mechanical manufacturing and other service businesses, Vinacomin focused mainly on the main production areas, with core characteristics such as coal, minerals, electricity, and industrial explosives. Over the recent years, all areas of the Vinacomin operations have been productive and profitable. In particular, coal production has always been the area with the highest profit proportion.

In the recent 5 years, the profit proportion of Vinacomin in some sectors (minerals, explosives materials, etc.) has increased) has an increasing trend, showing that Vinacomin is moving towards a sustainable development strategy, gradually reducing dependence on coal production and trading.

On the other hand, Vinacomin is promoting the development of other environmentally friendly production sectors by the Prime Minister's commitment at the COP26 Conference on the issue of reducing greenhouse gas emissions and moving towards stopping the use of coal "without reduction".

The mineral sector has had remarkable development, especially the 2 alumina projects. Since being put into commercial operation, the Tan Rai project (October 2013), and Nhan Co project (July 2017) have brought high economic efficiency, opening up a development direction for a completely new industry in Vietnam.

Increasing financial autonomy:

Thanks to promoting effective production and business, Vinacomin has contributed significantly to the state budget. Of which, the amount paid to the state budget for Quang Ninh province alone accounted for 60%, making an important contribution to the economic growth of Quang Ninh. In particular, in 2023, the Vinacomin achieved a record high state budget payment since its establishment with a value of VND 29,216 billion (over USD 1.1 billion). Of which, the state budget payment of Vinacomin in Quang Ninh accounted for 41% of the province's budget.

Along with that, the state capital at Vinacomin also increased from VND 778 billion in the first year of its establishment to VND 48.3 trillion in 2023. State capital invested in the Vinacomin has always been preserved and developed over the years with a very high growth rate. Currently, the charter capital of the parent company reaches VND 35,000 billion, Vinacomin is continuing to submit to the Government for approval to increase the charter capital of the parent company from VND 35 trillion to VND 42 trillion and is expected to be completed in 2025.

The financial management, Vinacomin has gradually transformed and improved financial management through direct payments to mining companies and focused on arranging capital at the parent company; applying digital technology in financial accounting (including electronic invoices and electronic money transfers). Since 2017, Vinacomin has implemented SWAP currency swaps, helping to minimize exchange rate risks and generate profits of about VND 355 billion from USD 735 million.

In addition, Vinacomin focuses on debt management and has fulfilled its payment obligations to the State and partners. The Vinacomin has no overdue debt and uses internal debt offset methods to save costs and speed up payment progress. Optimal debt management has contributed to increasing financial autonomy, improving the financial situation of the Vinacomin and has been recognized and highly appreciated by owners and state management agencies. The financial coefficient of Vinacomin is maintained within safe limits. The average return on equity (ROE) archives 14.6%/year, with the highest level being nearly 19% in 2022. The return on total assets (ROA) is 4.5%/year on average. The debt repayment capacity coefficient is regularly maintained at over 1 time, showing that good payment ability is highly appreciated by credit sponsors, trusted by business partners, and assured and trusted by employees.

The debt to equity coefficient is lower than the ceiling of 3 as prescribed (in Decree 87/2015/ND-CP, 2023) - this coefficient is only at 1.24 times, demonstrating that the financial autonomy of Vinacomin is increasingly high.

The divestment under the Vinacomin is carried out on restructuring by the principles of publicity, transparency, preservation of state capital and compliance with current legal regulations. Currently, Vinacomin is continuing to implement divestment at 19 subsidiaries and affiliated companies under the restructuring plan until 2025 approved by the Prime Minister (in Decision 1263/QD-TTg dated October 27, 2023).

Accordingly, Vinacomin will focus resources on key production and business sectors to further improve capital efficiency and asset efficiency, continuing to create momentum for a new growth phase. The above-mentioned achievements are the clearest evidence, affirming Vinacomin in continuous growth over the past 30 years.

Under the concentrated and effective leadership of the Party Committee, the member Council, and the drastic and flexible management of the executive board through the periods, all officers and employees in the Vinacomin have always overcome many difficulties and challenges to excellently complete the tasks assigned by the Party and the State.

Vinacomin is proud to be one of the large and strong economic groups, developing stably and sustainably, making an important contribution to the cause of industrialization and modernization of the country.