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Big steel projects raise big worries   2008-10-30 - TBKTVN

Steel projects worth several billions dollars each have been flocking to Vietnam. However, the existence of too many steel projects has raised worries rather than joy.


To date, Vietnam has had six major steel projects. Most recently, the project run by the joint venture between the Vietnam Shipbuilding Industry Corporation (Vinashin) and Malaysian Lion Group, called the Ca Na Steel Complex in Ninh Thuan province, capitalized at US $9.8 billion was licensed.


Prior to that, Taiwan invested 15 millions tonnes per year to the Formosa-Sunco project in the central province of Ha Tinh, which capitalized at US $7.8 billion, and 5 million tonnes per year to the Taiwanese Tycoon-E.United in Dung Quat Economic Zone, which capitalized at over US $3 billion, were also licensed.


These prove to be not the last steel projects either. Two other projects are being considered, including the joint venture between the Vietnam Steel Corporation, Vietnam Cement Corporation and Indian Tata Group; and a project invested by South Korean Posco in Van Phong Bay, located in the central province of Khanh Hoa.


According to the Ministry of Industry and Trade’s Institute of Industrial Strategies, by 2020, Vietnam will need some 22 million tonnes of steel. Meanwhile, if all the licensed projects become operational on schedule, the total output will be 40 million tonnes by 2020.


Questions have been raised if all the projects can operate well. It seems to be unpractical to expect the profit for steel mills in the current difficulties: the ingot steel and finished products’ prices have been fluctuating.


The Ministry of Industry and Trade believes that steel projects should be welcomed, as the projects will help create jobs and pay taxes to the local budgets, especially in the difficult area of the central region.


However, the Vietnam Steel Association (VSA) does not agree with the ministry.


The existence of too many steel projects in Vietnam will be the threat to local industry. Pham Chi Cuong, Chairman of VSA, said that among the said projects, only one, the joint venture between VNSteel and Tata, sees the role of the Vietnamese partner, while others all are 100% foreign invested. However, the join venture is facing problems with the ownership of Thach Khe ore mine.


It is clear that the huge steel complexes will release tens of millions of coal and ore residues and smoke and dust, which will cause serious environmental problems.


Cuong said that China only allows foreign investors to hold no more than 30% of total capital in its steel mills, and it only licenses projects if they use modern technologies.

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