List of unplanned steel projects lengthened

Posted on 22 July 2009

Source: Intell Asia, July 21, 2009

The work on Thai Trung rolled steel mill project capable of producing 500,000 tonnes a year was officially started in the northern province of Thai Nguyen on July 19, after signing EPC with Danieli contractor previously.


Notably, the project is not listed in the development plan of steel approved at decision No 45/2007/QD-TTg and not subjected to the list of 32 unplanned steel projects of Ministry of Industry and Trade.


Earlier, in January 2009, the ministry's report to the government after checking the implementation of Vietnam's steel development for 2007-2015 showed that 32 projects obtained investment certificates of local authorities. In which, prime minister licensed three projects such as steel complex of Formosa Group in Ha Tinh province, another of Lions-Vinashin joint venture in Ninh Thuan province and China Sumiki Vietnam steel mill along with other five medium scale steel projects waiting for the permission of Ministry of Industry and Trade.


This means that the remaining 24 projects were licensed not based on current regulations and plans.


However, the work of Thai Trung steel project that has three major shareholders including Vietnam Steel Corp with the capital contribution ratio of below 30 percent is regarded as the heart of the steel sector, proving that Vietnam's steel sector still is attractive for both domestic and foreign investors despite in 2008, steelmakers continuously complained about losses, suspension in production and business.


More importantly, many local governances and enterprises are proposing the industry ministry to supplement new steel projects to Vietnam's plan.


For example, Dak Nong highland province with disadvantages in seaports or cast iron ores, infrastructure still asked the state's approval on a 500,000 tonne a year steel mill. Or Ba Ria Vung Tau, the province received the most steel projects in the country, also proposed the industry ministry to add a 2 million tonne a year steel project of a joint stock company to the country's steel development plan.


Entering 2010, the capacity of producing construction steel of factories that will start operation totals at seven million tonnes a year while the domestic demand is estimated at four million tonnes a year and the export prospect remains low.


The fact shows that local governance and enterprises seemed not to concern government Office's Official Letter No 1708/VPCP-KTN requiring the authorities to check and re-consider the granting of investment certificates to steel projects in their localities.


The requirement was released based on Vietnam Steel Association's proposal relating to some measures of implementing Vietnam's steel development plan for 2007-2015 and vision to 2025.


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