Vietnam Financial News Network

A $3 billion steel complex project in the central province of Quang Ngai will be restarted in early 2010 after three years of interruption.

Dung Quat Economic Zone

This project is backed by two Taiwanese enterprises, Tycoons and E-United with the latter holding the larger stake.

Investors have reported changes - the total area reserved for mills and specialised ports has increased to 537 hectares from the previously planned 460 hectares. The two investors have also decided to use larger equipment which has the capacity of five million tonnes of ingot steel per annum.

At first, the Dung Quat steel mill project in Dung Quat Economic Zone only had one investor - Tycoons, which registered investment capital of over one billion dollar. The Tycoons registered project was licensed in 2006. After that, the project’s investment capital was raised to three billion dollars when E-United jumped on the bandwagon.

The ground breaking ceremony for the project took place in late October 2007. However, after that no further move was made.

The tardiness in the project implementation has been explained by the slow process of getting site clearance. Meanwhile, investors adjusted the design of the steel mills, production lines and met with financial difficulties in the global economic crisis.

With the project set to resume Quang Ngai People’s Committee has requested relevant branches to speed up site clearance in order to get ‘clean land’ to allocate to investors.

Doubts about the feasibility of the project were raised several years ago, when insiders questioned investors. Chairman of the Vietnam Steel Association (VSA) Pham Chi Cuong said in 2005, when the investors applied for the permission to undertake the project that Tycoons was not a well known name among steel producers. He also said that he did not think the low investment rate of one billion dollar would be able to churn out five million tonnes of ingot steel per annum.

However, the project has been applauded by the Vietnamese Ministry of Industry and Trade (MOIT) which tries to encourage projects making ingot steel. The ministry is also happy that the mill will use materials imported from China, Brazil and Australia, rather than use limited domestic materials.