HSG building one plant after another
On March 1, 2017, HSG broke ground for a 20-hectare steel pipe plant located in Yen Bai Province. The total investment for the plant is VND1.05 trillion ($46 million) and it was designed with the annual capacity of 220,000 tonnes. The main products are iron and steel pipes to serve the Northern provinces.
The factory in Yen Bai would add a significant capacity to HSG’s network of factoriesbut it’s nowhere near the game-changing factory HSG is planning in Ninh Thuan Province. Recently, HSG made headlines when it took over the Ca Na steel project in Ninh Thuan in August 2016. With a total investment of $10.6 billion and a capacity of 16 million tonnes per year, this project is expected to be the largest steel plant in Vietnam. Its construction will comprise of five stages between 2017 and 2031, with the first one being put into operation in 2019 at an annual output of 1.5 million tonnes.
Licensed in 2008 with the investment of Lion Group and Vinashin, the Ca Na steel project was the biggest FDI project ever licensed in Vietnam at the time. The project started construction in November 2008, however, due to financial difficulties, progress was slow and Lion Group withdrew, leading to long delays. Consequently, in 2011, Ninh Thuan Province revoked the project’s investment certificate before HSG took over.
Besides the Ca Na project, HSG also invested in many steel projects of smaller scales. In 2016, the company started building two steel plants in different regions.
The first one was the Hoa Sen Nhon Hoi factory in Nhon Hoi Economic Zone (Binh Dinh Province). The 12.4-hectare project was constructed in January with a total investment of about VND2 trillion ($89 million). It is expected to be put into operation in June 2017 and push out 180,000 tonnes of galvanized steel sheets and zinc-aluminium alloys, 90,000 tonnes of colour-coated steel sheets, and 200,000 tonnes of cold-rolled steel units on an annual basis.
The next steel plant, called Hoa Sen Ha Nam steel factory, is being constructed in Kien Khe Industrial Cluster (Ha Nam Province) since March 2016 and is expected to be finished in September 2018. The project has a total investment value of VND3 trillion ($134.3 million) and an annual capacity of over 800,000 tonnes.
HPG joins the race
HPG is also busy building plants. After HSG’s steel project was approved, HPG picked up the gauntlet by taking over the Guang Lian steel plant in Dung Quat Economic Zone (Quang Ngai Province). The project was approved and given the investment certificate in February 2017. The plant is now called Hoa Phat Dung Quat Steel.
HPG’s project has an investment of VND60 trillion (2.6 billion) billion and a capacity of four million tonnes per year. The project comprises of two phases and is expected to be completed in four years. The first phase will begin in February and the second in August 2017.
The main products will be construction steel and rolled steel used in manufacturing. The factory is hoped to generate $2 billion of revenue annually, contribute $178.3 million per year to the province’s budget, and create about 8,000 jobs.
The Guang Lian project was licensed about ten years ago, but it was delayed in construction for a long time due to the financial difficulties of its Taiwanese investor, E-United Group.
In 2016, HPG also opened its second steel pipe plant in Hoa Khanh Industrial Zone (Da Nang Province).
Concerns of timing and environment
In June 2016, the scandal of mass fish deaths started in Vung Ang then spread to Quang Binh, Quang Tri, and Thua Thien-Hue provinces. At the end of June 2016, Formosa Ha Tinh assumed responsibility and admitted environmental violations. This scandal has become an expensive lesson and since then localities have grown wary of steel projects.
Thach Khe mine is an example of the cautiousness of Ha Tinh authorities after the Formosa scandal.
The Thach Khe iron mine project received its investment certificate in 2008. In the same year, the feasibility and environmental impact reports were approved. In 2011, the project was suspended because the reports were no longer “appropriate to the actual situation” and was subsequently adjusted. The new environmental impact report was approved in 2013. The adjusted scale and investment capital was approved in 2014. The technical design is still being evaluated by the Ministry of Industry and Trade (MoIT).
In an October 2016 resolution, the Prime Minister asked the MoIT to complete all procedures so that Thach Khe mine can start in the first quarter of 2017.
However, in November, the Ha Tinh authorities requested the government to ask all related agencies to research the project all over again in all aspects, including the capacity of investors, sources of funding, social and economic impact, technology, market, human resources, and environmental impact.
Due to concerns over environmental pollution, there is widespread opposition to HSG’s factory, including VinaCapital, one of Vietnam’s largest asset management companies and a 0.5 per cent shareholder of HSG itself.
Nguyen Hoai Thu, managing director of VinaCapital, raised concerns over the environmental impact of this steel project. She also said that VinaCapital may reconsider holding HSG’s shares if the company goes ahead with the project without appropriate environmental protections measures.
Confronted with the opposition, Le Phuoc Vu, chairman of HSG, has promised to protect the environment while manufacturing steel.
“If my project causes anything akin to what Formosa did, I hereby confirm and vow to transfer all my shares and assets at HSG to the state,” Vu claimed, as Tuoitrenews reported.
Similarly, HPG affirmed that its steel project in Quang Ngai is environmentally-friendly, as it uses the same technology as its Hai Duong plant.
Besides, many experts have also voiced concern as there is already a global surplus of steel and whether Vietnam can compete with Chinese steel imports. Some advised that Vietnam should have invested in other industries that it has a comparative advantage in.