Forced move delays Kobe Steel’s Hoang Mai iron project

The company, which is Japan’s leading steel manufacturer, decided to relocate when they discovered their original site in central Nghe An province’s Hoang Mai Industrial Park was unsuitable for such a large factory.

Kobe have now garnered approval from Deputy Prime Minister Hoang Trung Hai to move from Hoang Mai Industrial Park to Dong Hoi Industrial Park. Both of the parks are located in Nghe An’s South-East Economic Zone.

“The investor found caves under the project’s site,” said Phan Xuan Hoa, vice head of the Nghe An South-East Economic Zone’s authority.

He said the relocation was not a serious issue, but it would have an impact on the construction schedule of the project. “Kobe Steel has to delay the project construction at least eight months, or even a year. It would have to file a new environment impact assessment and reinitiate administrative procedures”.

Last May, Kobe Steel signed a $44 million contract with Petro Vietnam V.I.P Investment Joint Stock Company (PVCOM) to rent 40 hectares of land in Hoang Mai Industrial Park through its wholly-owned Kobelco Iron Nugget Vietnam Limited Liability Company. The relocation will not change the terms of the original contract because PVCOM is also the developer of Dong Hoi Industrial Park.

Hoa said the provincial authority was pushing hard to help Kobe Steel start construction as soon as possible. The project was important in terms of attracting investment to the zone, which was established in 2007 to boost economic development in Vietnam’s north central region.

“Once this project is successful, many other foreign investors will follow suit and invest here,” he added.

Kobe Steel, in cooperation with Sojitz Corporation, initially proposed development of their iron nugget manufacturing plant in northern Phu Tho province, about 80 kilometres from Hanoi. They foresaw a total investment capital of around $330 million.

However, the Japanese giant finally opted to build its own factory in Nghe An, which will manufacture 2.4 million tonnes of iron nuggets, a key raw material for steel production, per year. Kobe Steel plans to use its own next-generation ITmk3® ironmaking process at its plant.

The ITmk3® Process would enable Vietnam to make effective use of its mineral resources, and the use of relatively inexpensive raw materials would help improve the profitability of the project, said Kobe Steel.

Once operational, Kobe Steel’s plant will play a key role in satisfying Vietnam’s rising demand for this material.

>> Kobelco finds a new home