Shipbuilder says making its own steel is the only way forward

The Vietnam Shipbuilding Industry Group (Vinashin) is now facing criticism for moving into steelmaking – an area where it is considered to have little expertise.

However, the group denies the charge saying it has every reason to follow a steel project.

The Vietnam Steel Association (VSA) has sent a dispatch to the Government Office, requesting it considers the Vinashin’s plan to expand the steel project in Quang Ninh province to have the capacity of one million tonnes per annum.

The association said that making steel for building ships is really not an area where Vinashin has much experience. VSA warns that Vinashin’s project will be unfeasible, while Vinashin continues to complain that it does not have enough capital for investment projects.

However, Vinashin continues to maintain that it needs to develop the project in order to take the initiative in plate steel supply and allow them to improve the group’s competitiveness.

Vinashin’s Chairman Pham Thanh Binh said that currently, Vinashin has to import steel from the shipbuilding rivals, which means Vinashin has to find more money and it takes more time.

“If we continue purchasing steel from them, we will be less competitive than foreign shipbuilders in terms of prices, or we will have to accept lower profits,” Binh said.

According to Nguyen Tuan Duong, general director of Cuu Long-Vinashin, the general contractor of the steel project in Quang Ninh, plate steel makes up 20-25 percent of the production cost of a ship. If including machine’s parts, steel accounts for 90 percent of a ship.

Binh said that if shipbuilders purchase steel from domestic manufacturers, they will be able to save £100 million a year thanks to the lower prices of up to 20 percent.

He admits that Vinashin faces big problem due to capital shortage, and he says Vinashin has to inject money in the steel project. “If not, our difficulties will be even bigger,” he said.

Regarding the implementation of the project, Duong said that Vinashin would be the 100 percent investor and the group would execute the project itself.

“We have been facing major difficulties in terms of capital. Meanwhile, foreign partners set too many claims on prices for the mill installation. Therefore, the group has decided to undertake the project itself and has assigned the project to Cuu Long-Vinashin.

TBKTVN: The Government Office has received documents from VSA which said that Vinashin does not have experience in making steel.Duong: It is no problem. Our mill in Hai Phong City has been churning out steel products already. TBKTVN: VSA says steel for building ships is not a kind of special steel. Therefore, it can be made by other enterprises . Binh: I can say for sure that the steel for building ships must be a kind of special steel which can be used for shipbuilding where there is a need for a certificate for international registration. There are many kinds of plate steel, but not all of them can be used for shipbuilding. TBKTVN: Some experts have warned about the excess of steel. . . Binh: It is true that before 2012-2013, Vinashin may not use up all the steel output and we plan to export steel. However, our demand will be 2.5 million tonnes by 2015, which means that we will have to make further investment

VietNamNet/TBKTVN

Tags: Vietnam shipping industry, Vietnam steel industry