Steel projects set to get new lease on life

Authorities are determined to stop a potential steel glut

Ba Ria-Vung Tau Industrial Zones Authority said that withdrawing the company licences would simply cause investment difficulties.

The authorities filed the proposal two weeks after the provincial People’s Committee leaders agreed to revoke the projects’ investment certificates due to their delays and environmental and power shortage concerns.

The five projects include Phu Tho project, capable to produce 500,000 tonnes of billet per year, the Vietnam Steel Corporation (VNSteel) project to manufacture two millions tonnes of hot rolled steel per annum, two steel projects invested by Thep Viet Ltd, Company and a billet production project invested by Taiwan’s Fuco Steel Ltd.

Most are located in Phu My Industrial Park in Tan Thanh district, 125 kilometres from Ho Chi Minh City.

The five projects have a total manufacturing capacity of 3.7 million tonnes of cold rolled steel and hot rolled steel and 1.5 million tonnes of billets a year.

Ba Ria-Vung Tau People’s Committee chairman Tran Minh Sanh agreed to withdraw the five certificates in late September after considering a report by a local inspection team on excessive development of local steel projects, which had resulted in many aching issues relating to power shortages and environmental pollution.

Another problem with the five projects was the slow progress of construction since receiving production sites.

According to the inspection report, the province has 18 steel projects with a total capacity of 3.75 million tonnes of billets and more than 10 million tonnes of rolled steel per annum.

However, the government required the province have only eight steel projects totalling 900,000 tonnes of billets and 6.74 million tonnes of rolled steel a year in its 2007-2015 master steel development plan.

It was not the first time provincial authorities considered withdrawing the projects licences due to slow progress.

In March 2009, local industrial zones authorities said they would revoke the licences of the billet and steel project of Pomina Steel, a member company of Thep Viet Steel Ltd. and the cold rolled steel project of Thep Viet in Phu My Industrial Park because of their slowness.

Authorities last year also threatened the $180 million billet project of Taiwan’s Fuco Steel, which was licenced in April, 2007.

“Fuco Steel is completing construction work now,” said Nguyen Van Lam, deputy head of the Ba Ria-Vung Tau industrial park management board.

“It would be unfair for the authorities to revoke the Taiwanese investor’s licence at this time,” Lam said.

Truong Dinh Viet, director of VNSteel’s Department of Planning and International Cooperation, said the corporation would open bidding for the engineering-procurement-construction of the two-million-tonne steel project in Phu My Industrial Park.

The project, a joint venture between India’s Essar Group, VNSteel and Vietnam Rubber Corporation, received an investment licence in March, 2007. Essar, however, sold all 65 per cent of its shares to VNSteel two years later due to financial distress.

In March 2010, VNSteel sold a 19.5 per cent stake in the project to Industrielle Beteilligung SA of Italy’s Danieli Steel Group.

“VNSteel already sent a document to Ba Ria-Vung Tau People’s Committee to explain the project’s importance, the biggest hot rolled steel plant in Vietnam which will help ease local shortages in the future,” Viet said.

Huynh Van Chinh, deputy general director of the Ba Ria-Vung Tau Industry and Trade Department, said the province and the MoIT were still considering local industrial zones authorities’ proposal.