Steel projects breaking planning, wasting minerals

Continued establishment of steel projects actually has caused many difficulties for the heavy industry in Vietnam. Those are steel mills with outdated technologies, energy wastage and environmental pollution.

Steel sector planning has been broken by “multi-billion US dollar projects” as well as tiny ones. The problem is whether the steel sector is out of law?

Outdated steel mills with small capacity of between 5,000 and 20,000 tons per year are using self-manufactured equipment and machines, which resulted in low-quality products.

Total steel output of Vietnam is estimated at 9 million tons a year, steel billet output of four million tons/year and remainder is processed manually. According to Pham Chi Cuong-chairman of Vietnam Steel Association (VSA), during the years, the sector mainly exported processed products with modest power consumption as cold rolled steel. Electricity consumption for the processing accounts for 1.5 percent of cost price in Vietnam (averaging 100-120 kWh per ton). In which, the manufacturing of steel billet, scraped steel consumes an electricity cost higher 4-5 times than steel processing (averaging 600 kWh per ton). The consumption will be reduced to 350 kWh per ton if enterprises use advanced technologies. Among 32 steel makers in VSA, only four firms apply advanced technology of the world, and 10 are improving, others still are using old technologies. Two technologies including high and electrical furnace are popular in Vietnam’s steel production.

High-furnace technology in steel manufacturing now harms environment because of let-out of coal and ore slag. And electrical-furnace technology can re-produce used products without environmental pollution and short production process. Output has high quality and better productivity. But the electrical furnace costs average 350-600 kWh per ton of steel billet.

According to VSA, new investors and steel makers such as Southern Steel, Hoa Phat, Viet Steel, Posco are applying Italian modern technologies with production efficiency. The steel billet mills, which were built in recent 2 years, all have capacity of 500,000 tons a year.

Steel sector picture is brighter thanks to big investments and modern technologies instead of small and unplanned projects, but only 4-5 of hundreds of steel makers have invested in technologies properly.

The country has 65 steel production projects with a designed capacity of 100,000 tons a year each (excluding projects under the management of Vietnam Steel Corp). Of which 58 are domestic and joint ventured, seven FDI projects with total investment capital of 41.623 trillion dong and $19.8 billion (excluding the mills with tens of thousand of tons per year).

Notably, only 17 are planned, 16 are added in planning while remaining 32 other projects licensed by local governances are unplanned without Prime Minister’s approval and discussion with Ministry of Industry and Trade.

Up to now, the sector has met nearly 70 percent of the demand of square steel billet, 50 percent of cold rolled steel and 100 percent of demand for construction steel.

Vietnam expects to need 15 million tons of steel by 2015 and 20 million tons by 2020. If the above projects are implemented in line with right progress (with total designed capacity of 35.29 million tons/year), the supply will surpass 1.5-1.8 times than demand. – Vietbiz24

Posted by VBN on May 20 2011. Filed under Steel. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry