Hoa Sen Group to replace ill-fated foreign investors in two multi-billion steel complexes

The group has just announced that it would seek its shareholders’ approval at the extraordinary shareholders’ meeting on September 6 for taking over a six million tonne steel manufacturing complex in the central province of Ninh Thuan’s Ca Na industrial park (IP). The group estimated the total investment capital for this delayed project at about $3.8 billion.

At this upcoming meeting, the discussion issues will also relate to the detailed development phases, the investment model, and technologies, partners and suppliers.

Back in September 2008, the Ca Na IP-based steel complex with the annual production capacity of 14 million tonnes was licensed to a joint venture between state-owned Vietnam Shipbuilding Industry Group (Vinashin) and Malaysia’s Lion Group.

The joint venture registered $9.8 billion in terms of the total investment capital for this complex, which is known as the largest foreign invested project licensed in Vietnam in that year. The construction of Ca Na complex started two months after its investment certificate was issued. The investors promised to complete the first phase by the end of 2011.

However, financial troubles of both partners forced Lion Group to withdraw from the project. In 2011, the Ninh Thuan Industrial Zones Management Authority announced to revoke the investment certificate of Ca Na steel complex.

A year ago, chairman of Hoa Sen Group Le Phuoc Vu met with the Ninh Thuan Provincial People’s Committee and expressed the interest in reviving Ca Na steel complex, which was expected to cover 1,700 hectares.

In a similar development, Hoa Sen Group has been reportedly in a race with its domestic competitor Hoa Phat Group to replace Guang Lian Steel Vietnam – a joint venture between Taiwanese enterprises Tycoons and E-United Group in developing the long-delayed Guang Lian steel complex in the central province of Quang Ngai’s Dung Quat economic zone.

Licensed in September 2006, the project was initiated by Taiwanese steel giant Tycoons with the total investment capital of more than $556 million. The investor committed to completing the construction within 36 months. E-United Group joined the project later by acquiring a 90 per cent stake. The two Taiwanese enterprises raised the registered investment amount to $3 billion in 2008 and then $4.5 billion in 2010, while simultaneously increasing the factory’s manufacturing capacity to seven million tonnes per year, five million tonnes higher than the initial capacity.

In March 2016, the two investors submitted a document to the authority, committing to restarting the project with the total investment capital of $2.2 billion and an output of five million tonnes per year. The investors also committed to completing the construction within 42 months.

Since its ground-breaking ceremony in 2007, the investors have put in about $42 million in constructing some work facilities, such as house blocks for workers, walls, and installing pile driving equipment.

Established in August 2001, Hoa Sen Group is now one of the leaders in terms of steel sheet production and trading business in Vietnam and Southeast Asia. The group’s products are currently making up 40 and 20 per cent of the domestic steel sheet and steel markets, respectively, and its products are present in over 60 countries and territories around the world.

The group has invested in numerous steel and steel sheet manufacturing factory projects in Vietnam.
On March 17 this year, Hoa Sen Group held the ground-breaking ceremony of Hoa Sen Ha Nam steel manufacturing factory in in the northern province of Ha Nam’s Kien Khe I industrial cluster.

Covering an area of 20.4 hectares, the factory with the total investment capital of VND3 trillion ($134.3 million) will produce steel pipes, hot-dipped galvanised steel pipes, uPVC pipes and fittings, and high-density polyethylene (HDPE) pipes at an annual total capacity of over 800,000 tonnes of products. The construction is expected to reach completion in September 2018.

In January 2016, the group started the construction of Hoa Sen Nhon Hoi steel sheet factory located in in the central province of Binh Dinh’s Nhon Hoi economic zone. The 12.4-hectare, $89 million facility is expected to commence operation in June 2017, and supply 180,000 tonnes of galvanised steel sheets and zinc-aluminium alloys, 90,000 tonnes of colour-coated steel sheets, and 200,000 tonnes of cold-rolled steel units to domestic and foreign partners.

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