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Steel industry’s power use sparks debate   2010-09-27 - Viet Nam News

The argument between the power and steel sectors reached a crescendo last week with the chairman of Electricity of Viet Nam, Dao Van Hung, saying steel firms have taken advantage of the low electricity prices in Viet Nam.

Though steel supply exceeds demand in Viet Nam, many foreign firms still seek to invest in the country, hoping to export their products for higher profits, Hung has been quoted as saying.

"If power is supplied to steel plants at VND5,000 for a kWh, will they pour their money into Viet Nam?" he asked.

They pay just over US4.7 cents per kWh, much lower than in Indonesia (6.7c), Thailand (8.1c), and Singapore (14c).

Steelmakers use up to 1,900MW while cement plants consume 1,200 to 1,500MW, together adding up to 18 per cent of EVN’s total output.

Their huge consumption is causing power shortages from which all people and economic sectors suffer, according to Hung.

Hung’s statements came two weeks after the chairman of the Viet Nam Steel Association, Pham Chi Cuong, opposed an EVN recommendation to the Government that steel plants making more than 100,000 tonnes a year should build their own power plants.

Cuong said the proposal was "not reasonable."

"If steel refineries have to build power plants and cement plants have to produce coal for themselves... why is EVN present?" he asked.

Generating their own power would make costs prohibitive, he said, pointing out it took the country decades to attract foreign investment in the steel sector.

The industry was the "backbone" of other industries like automobile manufacture, transport, and ship-building, he said.

"Without investment in steel, we would have to import steel and it will lead to a huge trade deficit."

According to the Ministry of Industry and Trade, 65 steel plants with an annual capacity of 100,000 tonnes or more, including seven foreign, are operating in the country.

Half of them were licensed by provincial authorities and have never been approved by the Government.

Many of them used obsolete technologies that need 500-600 kWh to produce a tonne of steel billet compared with the 350-400 kWh for Japanese plants.

The ministry added they also caused environmental problems.

Golf courses eat up land

While it is difficult for State agencies to obtain land for building dormitories for students and workers and other social programmes, delays in the construction of golf courses in HCM City have left nearly 800 ha of land unused.

According to a recent report by the city People’s Committee to the Ministry of Natural Resources and Environment, only one of the five golf courses approved to be built, Hoa Viet in District 9, has been completed.

The others have been delayed due to various reasons.

To speed up their construction, the People’s Committee has warned that their licences will be withdrawn if there is any further delay.

The Yonwoo – Van Phuc Co Ltd has already had its licence withdrawn for the Hiep Binh Phuoc Golf Course and Entertainment Area project in Thu Duc District.

The committee chairman, Le Hoang Quan, has also ordered the repossession of portions of the land allocated for some of the courses for social purposes.

It includes four ha in Districts Thu Duc and 9 for building workers’ dormitories for the Sai Gon Tailoring Co No 3.

The Committee has ordered authorities not to license Saigontourist’s proposed 156ha golf course in District 9.

HCM City authorities have also warned they will reject proposals to convert all or parts of cultural, sporting, and entertainment projects into real estate developments.

Shortage of material

Textile and garment firms face a sharp rise in the price of cotton and wool, their main raw materials. Global cotton prices are at their highest in the last 15 years.

The Viet Nam Textile&Apparel Association blamed this on India’s clampdown on cotton exports and the droughts and floods in other major cotton producing countries like China and Pakistan.

Viet Nam, which can produce only 5 per cent of its cotton needs, has to import large volumes from the US, India, and African countries.

The association said last year its members imported some 300,000 tonnes. In the first half of this year the country shelled out US$500 million to import 260,000 tonnes of cotton, a year-on-year increase of 30 per cent.

Around 370,000 tonnes will be imported for the whole year.

Vu Huy Dong, chairman and CEO of the Thai Binh Province-based Damsan Textile JSC, said the increase in cotton prices this year, especially in the last two months, had increased production costs.

Nguyen Ngoc Binh, former general director of the Viet Nam Cotton Corp, has been quoted as saying that cotton prices will continue to increase through the end of next year.

Due to the rising prices, many countries have imported and stockpiled large volumes, but not Viet Nam because of its limited financial capacity.

Nguyen Son, deputy secretary general of VITAS, said Vietnamese enterprises could only afford to import cotton for three months at a time.

But VITAS feared the increase in prices of textile products was too low and could not make up for the rise in cotton prices.

The country textile and garment exports have been worth around US$7.5 billion in the first nine months, a year-on-year increase of 17 per cent.

Whole year exports are likely to reach $10.5 billion, according to VITAS.

In the domestic market, one of the major concerns for textile and garment firms was the quantity of goods smuggled in from China, VITAS said.

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