Heavy losses force Vinachem to close fertilizer plant

Ninh Binh urea fertilizer plant, with investment capital of $667 million, had an annual output of 540,000 tons.

The plant was put into operation four years ago, but has incurred heavy losses due mainly to soaring production costs, slumping market prices and high maintenance expenses, said Deputy General Director Nguyen Gia The. Its combined losses over the past four years are estimated at almost VND2 trillion ($90 million).

Vinachem secured a loan of $250 million from Chinese investors at the start of the project and chose China Huanqiu Contracting & Engineering Corp. as the main supplier of equipment and materials.

A $667 million fertilizer plant comes to a halt on mounting losses. Photo by Phuong Vy

“We find it difficult to be competitive in the market. Fertilizer makers from both China and the domestic market can offer lower prices. We are carrying a huge stockpile of more than 50,000 tons of fertilizer,” said The.

He blamed technology that uses coal dust rather than gas to produce urea fertilizer.

Vinachem decided to suspend production at its Ninh Binh plant a month ago and put 40 percent of the workforce on temporary leave to save costs.

The plant may resume operations after offloading half of its stock, but that seems unlikely, The added.

Vinachem has appealed to the PM and the Ministry of Industry and Trade to step in and help the fertilizer maker out of its financial difficulties.