Government orders check on Guang Lian steel project

Deputy prime minister Hoang Trung Hai has told the Ministry of Industry and Trade to check the ability of mobilising investment capital for Guang Lian Dung Quat steel project.

The order comes after the project developer proposed expanding the designed production capacity from five million to seven million tonnes a year.

According to a document issued by the government Office, Hai also required the industry and trade ministry to check the product lines of this large project and report the results to the government within this month.

An official of the Vietnam Steel Association (VSA) told the Daily on Monday that it was necessary to carefully scrutinise whether the project developer could raise as sufficient capital as needed to ensure the viability of the long-delayed project.

The project has been underway for over four years but has turned out no steel products.

Guang Lian Steel Vietnam Limited Company as developer of the project in the central province of Quang Ngai has asked the government and relevant ministries to allow it to raise the production capacity.

The output adjustment will send the total cost of the project in Dung Quat Economic Zone rising to $5 billion from the previous $3.5 billion, the official of VSA said. “The project has changed hands four times so far.”

The steel association official said the proposal for scaling up the capacity of the project could be seen as a time-buying tactic as the investor had difficulty mobilising enough capital for the project.

The official, who declined to be named, said the association also petitioned the government to ask Quang Ngai Province to set a deadline for the developer to finish the whole project; otherwise, the investment license would be revoked.

The official described the proposal of Guang Lian Steel Vietnam Limited Company as irrational. The investor wanted to increase steel production by two million tonnes a year, but they suggested boosting their annual processing capacity by only 500,000 tonnes of cast iron as the main material.

Dung Quat Economic Zone Authority says on its website that while waiting for approval for expanding the production capacity at the steel mill, piling work is still taking place so that factory construction can start early next year.

The authority said Guang Lian steel project was licensed in 2006 and that the groundbreaking ceremony took place a year later.

According to the newly-proposed plan of Guang Lian Steel Vietnam, construction of the first phase is scheduled to finish in late 2013 and the steel mill would be up and running after that. – Saigon Times

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