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Huge steel projects coming
More and more huge steel projects, expected to be the biggest steel mills in Southeast Asia when they become operational, have been licenced recently. Investors have been throwing money in the steel industry – rapidly being considered the key industry in Vietnam.
Under the approved steel industry development strategy, the demand for finished steel in Vietnam will reach 10-11mil tonnes by 2010 and 24-25mil tonnes by 2025. According to Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), Vietnam will only need to build one or two steel complexes to meet domestic demand for the next 10 years.
A lot of new steel projects have been announced recently, including Tycoon-E-United project in Quang Ngai province, which was licenced in 2006. The project was initially co-invested by Taiwan’s Tycoons and China’s Jinnan, which committed to invest VND1bil in the 5mil tonnes/year mill. However, the Chinese partner later withdrew from the project, and was replaced by Taiwan’s E-United, which became the main investor in the project with 90% of capital contributed. The project was kicked off in October 2007.
Formosa-Sunco Steel Complex in Ha Tinh province was licenced on June 11, 2008 and construction was kicked off on July 6, 2008. This is a Taiwan-invested complex with two partners, Formosa Plastic (95% of capital) and SunSo (5%). The complex will have the capacity of 15mil tonnes/year when operational.
Some other steel projects are awaiting licences, including the VnSteel joint venture project between Vietnam’s Steel Corporation and India’s TaTa. The steel complex will use materials from the Thach Khe iron mine to churn out 4.5-5mil tonnes a year.
South Korean giant steel producer Posco officially submitted to the government a project on a steel complex in Van Phong bay in the central province of Khanh Hoa. The complex would be able to churn out some 4mil tonnes of HRC in the first phase of the project.
The project was initially a joint venture project between Vietnam’s Vinashin and South Korea’s Posco. However, Vinashin later withdrew from the project because it needed to focus on other investment projects.
Vinashin also has another joint venture steel project with Malaysia’s Lion Group in Ninh Thuan province, which is expected to have the capacity of 4.5mil tonnes/year.
Pham Chi Cuong, VSA Chairman, said that if all of the said metallurgical complexes come into being, Vietnam will take a great leap in the steel industry with mills capable of churning out many millions of tonnes a year.
However, investors will consider the real demand of Vietnam’s market and regional markets to determine investment scale. Cuong said that two more mills with the capacity of VND5-10mil tonnes each would provide enough for the next five years.
Of the five above steel projects, four are foreign invested, while only one project will have a Vietnamese capital contribution – the joint venture of Vietnam Steel Corporation and TATA.
VNN
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