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Steel complex licences granted to inexperienced investors
Two steel complex projects in Vietnam, the two biggest in Vietnam, with the total capacity of 30mil tones, have been licenced. Unfortunately, the investors have no experience in metallurgy.
The project on the steel complex capitalised at $7.9bil by Taiwan’s Formosa Group has been licenced by the Vung Ang Economic Zone Management Board.
The project covers an area of 3,000 ha of land and water surface in Vung Ang Economic Zone, comprising a cast iron-steel complex and Son Duong deep water port. The complex is designed to have the capacity of 15mil tonnes a year, 7.5mil tonnes in the first stage and another 7.5mil in the second.
On September 19, 2008, the joint venture of Malaysia’s Lion Group and Vietnam’s Vinashin got a licence for the $9.8bil Ca Na steel complex in Ninh Thuan province. The project is expected to cover an area of 1,650 ha of land and 300 ha of water surface, and once operational, the complex will be able to churn out around 14.42mil tonnes a year.
Formosa is a Taiwanese heavy industry group, specialising in petrochemistry and plastics. Significantly, it has never made investment in steel. Meanwhile, Maju stabil Sdn. Bhd, a member of Lion Diversified Holding Berhard, the partner in the joint venture that runs Ca Na steel complex, is similarly no reputed name in steel production.
Neither of the two is among the world’s top 20 metallurgy groups, but they are investing in the two biggest steel complexes in Vietnam.
According to the Vietnam Steel Association (VSA), at the workshop on metallurgy industry held in HCM City on September 16 by SBB, a magazine about industry, which has an office in Singapore, a lot of foreign participants raised the same question: Why does Vietnam accept too many steel projects and why does it accept the investment projects of unknowns?
There is no doubt about the financial capability of Formosa group, but doubts have been raised about the technology the group will use as the group has no experience in metallurgy. Meanwhile, as for Lion group, people have doubts about both financial capability and technology.
According to VSA, very few steel complexes with the capacity of 15mil tonnes and higher have been built in the last 10 years. Even South Korea’s Posco group, the third-biggest steel producer in the world, has been facing difficulties with its 12mil tonne/year project in India. India’s Tata Group, the sixth-biggest steel group in the world, has only dared to implement a steel mill with the capacity of 5mil tonnes/year in Ha Tinh province.
Pham Chi Cuong, Chairman of the Vietnam Steel Association, said that Vietnam should follow Thailand’s method. The country invites at least five leading metallurgy groups in the world to draw up projects, and then it chooses the most suitable projects. Meanwhile, in Vietnam, the investments are chosen by local authorities.
VNN
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