Major steel projects put on hold

HANOI – A number of huge steel mill projects have been either put on hold or delayed for a long time, particularly those involving India’s Essar Steel, Taiwan’s Thien Huong and Formosa, and Vietnam’s Lilama, Bach Dang and Phu My.
A most recent Ministry of Industry and Trade inspection of key steel projects found that only 17 among 23 steel projects prioritized for implementation in 2007-2015 had got off the ground.
The high-profile project with involvement of Essar Steel with a 65% stake, Vietnam Steel Corp (20%) and Vietnam Rubber Group (15%) has been hanging in the balance. The investors originally planned to inject more than half a billion U.S. dollars into phase one of the hot strip mill with an initial capacity of two million tons a year but Essar is seeking a local partner to transfer its stake.
Nguyen Manh Quan, head of the ministry’s Heavy Industry Department, said in a report on the inspection that the Indian firm had proposed suspending the project in Phu My Industrial Zone in Ba Ria-Vung Tau Province due to financial constraints and tough market conditions.
Taiwan’s Thien Huong stainless steel project was licensed in 2006 but the investor has lost the license due to long delays.
In another 18 steel projects which are being developed in 2007-2015, four have not been able to go ahead as scheduled, including the cold rolled steel plants of Lilama, Formosa and Bach Dang, and phase two of Phu My steel plant.
Pham Chi Cuong, chairman of the Vietnam Steel Association, has suggested strictly monitoring all the licensed steel projects. “If (the projects) fail to conform to the approved schedules without due reasons, their licenses should be revoked.”
Authorities should keep a close watch on the pace of large foreign-invested projects, he said, proposing a ban on stake transfers from one investor to another.
For some projects, work has begun on the first phase only while they occupy a lot of land, affecting other projects, he noted.
Vietnam Steel Corp experts estimated each steel project needed 1,000 to 3,000 hectares of land, excluding land for seaports and support industries.
“Under the current circumstances, the wastefulness of land and long delays in steel projects will cause considerable losses for the places where the projects are located since vast areas of agriculture land have been occupied,” Nghiem Gia of the corporation told a recent roundtable at the Vietnam Steel Association.
The Saigon Times Daily