Major steel project halted due to “unresolved issues”

April 17, 2017 | 16:00

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Prime Minister Nguyen Xuan Phuc has requested the suspension of the $10.6-billion Ca Na steel project in the central province of Ninh Thuan in order to “clarify some issues related to the environment and technology.”

Ca Na steel project in the southern province of Ninh Thuan

This is the conclusion on the Ca Na steel project that the Prime Minister made at the regular government meeting in March 2017, and was recently announced by the Government Office.

The Prime Minister said that it is good that Ninh Thuan and the Ministry of Industry and Trade (MoIT) wanted to grow the province economically, but this project has only seen rudimentary evaluation and the preparations for it have been proceeding too fast. In addition, the prime minister added concerns that the information on the project is not comprehensive, leaving a sore need for clarification before the project can go ahead.

Specifically, the parties have to calculate the domestic demand for steel and specific types of products, and then review the country’s master plan on steel development and figure out the appropriate capacity and the timeline for the project.

The investor and government agencies also have to evaluate the environmental impact and review the technology to make sure the project is safe and will not repeat the Formosa incident. The project also has to review the total amount of capital needed, including the deep water port, the railway, and the road that are part of the project, and state clearly where the material to build the project would come from.

“This steel project was proposed after the Formosa incident so it is a sensitive topic. As early as during the stage of proposal the investor and the government agencies have to be clear on these issues,” the document said.

It said that after a careful review to clarify these issues, Ninh Thuan and government agencies can propose the project again for approval.

The prime minister said that calling a halt to the nuclear energy project earlier in November 2016 had an effect on the socioeconomic development of the province, so it is necessary to attract more plants. However, Ninh Thuan has many advantages in renewable energy, tourism, organic agriculture, not only nuclear energy and steel.

Meanwhile, on April 4, the working group from the Ministry of Natural Resources and Environment (MoNRE) complemented by a body of other scientists, have concluded that Hung Nghiep Formosa Ha Tinh Steel Co., Ltd. (HFS), a subsidiary of Taiwanese Formosa Plastics Corp. meets the requirements for the first blast furnace to start operation, after an investigation of the environmental protection components of the $10.5-billion steel and port complex in the central province of Ha Tinh.

Hoa Sen Group (HSG)’s $10.6-billion industrial zone, steel manufacturing and port complex in the central province of Ninh Thuan is set to be carried out in 2017-2031 in multiple stages and will have a final capacity of 16 million tonnes a year.

In mid-October the Government Office announced that the prime minister asked government agencies, including MoIT, the Ministry of Planning and Investment, the Ministry of Science and Technology, and MoNRE, to evaluate the project in all aspects, namely market demand, technology, and environment, and ask for scientists’ opinion.

In November, at the question and answer session with the National Assembly, Minister of Industry and Trade Tran Tuan Anh said that there would not be a trade-off between the project and the environment.

In early December, MoIT added the project to the first draft of the master plan for steel development until 2025, then it was left out of the second draft in mid-December.

Since the Ca Na project was approved by the extraordinary shareholders’ meeting on September 6, 2016, Hoa Sen Group has invested a total of VND14 billion ($615,600) in the project.

In order to carry it out, the company set up a number of subsidiaries to manage and supervise the implementation of the project’s components. These companies include Hoa Sen Ca Na-Ninh Thuan Industrial Park Infrastructure Investment One-Member LLC (HSIP), Hoa Sen Ca Na-Ninh Thuan Renewable Energy One-Member LLC, Hoa Sen Ca Na-Ninh Thuan Cement One-Member LLC, Hoa Sen Ca Na-Ninh Thuan International General Seaport One-Member LLC, and Hoa Sen Ca Na-Ninh Thuan Integrated Iron and Steel Complex Investment One-Member LLC (HSIC).

According to its financial report for the first quarter of the 2016-2017 fiscal year which coincides with the last quarter of 2016, the parent company has channelled VND11 billion ($483,670) into HSIC and VND3 billion ($132,000) into HSIP.

A year earlier, in April 2016, fish were found dying en masse along the central coast of Vietnam. Consequent inspection identified the reason as wastewater released during HFS’ test run. The incident harmed the livelihood of fishermen in the region for a long time after, as well as negatively affected the budding tourism industry of the central region.

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