Vietnam likely to act on delayed $2 billion steel project by August

By Toan Dao   April 11, 2016 | 02:06 am PT
The provincial government of Quang Ngai has asked authorities to revoke the investment license of a proposed $2 billion steel project by August due to delays, state-run Bao Dau Tu newspaper said in a report on Monday.

Part of the project site. Photo: Tri Tin.

The Guang Lian Steel project was originally initiated by Taiwanese steel giant Tycoons with a total investment of more than $1 billion in 2006. The E United Group of Taiwan later joined the project and the two Taiwanese enterprises raised the registered investment amount to $3.3 billion. In early 2012, Japan's second largest steelmaker, JFE Group, signed a memorandum of understanding to conduct a feasibility study on the project with E United. But after two years of studies, the Japanese enterprise decided to step aside and E United took over, reducing the investment to $2 billion. Since its groundbreaking ceremony in 2007, the investors have spent about $42 million on constructing facilities such as housing for workers, walls and foundations.

Quang Ngai's provincial government started an inspection on land use and progress of the project after E United announced in July last year they it was unable to finance it. The inspection is part of the province’s efforts to withdraw the investment certificate that was awarded to the project in 2006, Bao Dau Tu said.

E United, however, has surprisingly expressed intentions of returning to the project. The management board of Quang Ngai province’s Dung Quat Economic Zone, where the plant is set to be located, held a meeting with E United officials to discuss the issue last week.

“It is still early to say anything [about the Taiwanese company’s intentions] because the inspection of the project is underway,” a source said.

Leading domestic steelmaker Hoa Phat Group is also interested in building a steel project worth about $2.5 billion in Dung Quat Economic Zone. It is unclear whether Hoa Phat will take over the Guang Lian Steel project or not, but the Vietnamese company in late 2015 asked Quang Ngai to give a final decision on the delayed plant so that Hoa Phat can push forward its own proposal. Quang Ngai’s provincial government met with Hoa Phat to discuss the latter’s investment scheme on April 6, Bao Dau Tu said.

Hoa Phat made VND27.869 trillion ($1.23 billion) of sales value in 2015, up 7.8 percent from 2014. Its net profit last year stood at VND3.5 trillion, rising 8 percent year on year.

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