Project still a turn off

Nguyen Van Hai, deputy general director of the Ninh Thuan Provincial Industry and Trade Department, said provincial leaders were hunting investors for the $9.8 billion Ca Na steel complex project, which was previously registered by the Malaysia’s Lion Group and Vinashin.

Lion Group, which registered to contribute 70 per cent of the project’s investment capital, recently retreated from the project because of its capital distress. Vietnam’s state-run Vinashin has retreated into its shell facing allegations of financial mismanagement.

Hai said Ninh Thuan was working with the Ministry of Industry and Trade (MoIT) and the Monitor Group, which  is helping consult the province to build its socio-economic development strategy by 2020, to look for potential investors for the project. It comprises a 14.4 million tonne steel mill, a port and two power plants with an accumulative capacity of 1,450 megawatts.

“We already worked with Posco Group introducing the project for its consideration. The Korean firm preferred wind farm development in Ninh Thuan to steel mill since it already has other projects in southern Ba Ria-Vung Tau province,” Hai told VIR.

“There have been some other foreign investors coming to explore the project’s site and history. Yet, conclusions have not been arrived at. We understand that it will be a long process for potential investors to take consideration, particularly during this time when the government is scrutinising implementation of steel projects across the country,” he stressed.

The Ca Na steel complex was given an investment licence in September 2008, which would cover 1,650 hectares of land and 330ha of sea areas, located in Ninh Phuoc district.

The mill was projected to be developed in four phases with the first phase during 2008-2011. In the first phase, the project would build a 4.5 million hot-rolled steel mill, two power plants and the Doc Ham seaport, which would be capable of handling 15 million tonnes of cargo annually.

“Developing an integrated steel project like the Ca Na project is not simple. The investors will have to calculate how to use the port to handle not only steel, but also other kinds of goods. The same situation will also happen to the power plants, which must supply electricity for both the steel mill and other users,” Hai said.

“Consumption market for the project’s steel is also another problem, particularly when the Vietnamese market is projected to be oversupplied with steel in the next several years,” he added.

Indronil Sengupta, chief executive of Tata Steel's Southeast Asia Projects - which also has another $5 billion steel integrated project stuck in central Ha Tinh province, agreed that an integrated steel plant was complicated.

“There has been no successful implementation of an integrated steel project in the world [outside China] between 1998 and 2008,” Sengupta told VIR.

Tata Steel’s project in Vietnam has not been granted an investment licence yet though the investor has applied twice as it faces questions about raw materials, water supplies, road and port infrastructure.

“It is important to assess whether the investor behind any integrated steel mill has successfully implemented such a project in the past in other countries,” Sengupta said.

According to the MoIT, Lion Group is not included in the list of 150 biggest steel makers in the world.