Stop granting investment licenses to new steel projects: Ministry

Ministry of Industry and Trade has recently requested localities to stop granting investment licenses for new steel projects at the same time thoroughly review the licensed projects.

According to documents sent to the People’s Committees of provinces and cities, Ministry of Industry and Trade has asked the localities to immediately rectify the licensing of steel projects. According to survey, 30 provinces and cities nationwide have iron and steel projects.
Of that, some provinces have numerous projects such as Ba Ria-Vung Tau (15 projects), Hai Phong (9 projects), Phu Tho and Ha Tinh (4 projects), etc.

The steel output is mainly from FDI projects in Ha Tinh, Ba Ria-Vung Tau and Quang Ngai provinces. As for 2009, steel industry had meet 54 percent the demand for square steel billet, 40 percent cold rolled steel, and 100 percent construction steel. As per forecast, the country would need about 15 million tonnes of steel by 2015 and 20 million tonnes by 2020.

According to reviews of Ministry of Industry and Trade, to late August 2009, 65 iron and steel projects, with capacity from 100,000 tonnes per annum, have gone into production, or been under construction. Of that, 17 projects were on the planning list and Ministry of Industry and Trade agreed for 16 projects. Over 32 other projects were licensed by the localities without approval on investment policy of the prime minister.

Ministry of Industry and Trade stressed that those localities that granted licenses to major projects outside the industry planning and without approval of the prime minister have violated regulations and rectification is needed. The investment licensing of the localities have not guaranteed the necessary conditions on scale, production technology, product categories, input sources, infrastructure, thus leading to the lack of sustainability of some investment projects and imbalances between upstream and downstream productions.

To overcome this situation, Ministry of Industry and Trade will step up inspection on the production and business investment status of the steel industry in accordance with the approved planning. The ministry also requested localities to suspend licensing conventional construction steel projects and carefully review the projects that have been granted licenses.

Based on the review of the licensed projects, the ministry will propose to the government to consider adding into the planning the feasible projects, at the same time direct localities to revoke licenses of the projects that have not been implemented or been unable to comply with the committed progress without acceptable reasons.

The Vietnam Steel Association (VSA) earlier had proposed the prime minister to withdraw the licenses of the projects with delays in progress, causing waste and affecting the overall capacity of the entire sector. According to VSA, the current steel production capacity far exceeds the actual needs of the domestic market.

According to surveys of Ministry of Industry and Trade, there are currently 74 iron and steel projects with capacity from 100,000 tonnes per annum. In addition, there are some other steel mills managed by Vietnam Steel Corporation. Total investment capital of all the projects reached nearly 42 trillion dong and over $20 billion.

Of the total 65 projects (in late August 2009), there are 58 domestic projects and joint ventures and seven FDI projects. Three projects producing hot rolled were in the planning list but have had difficulties in implementation. Those are Ha Tinh steel complex of Tata Group, Ca Na-Ninh Thuan complex of Lion Group-Vinashin and Ba Ria-Vung Tau hot rolled plant (VNSteel took over from Essar Group).

Vnexpress

Tags: Vietnam steel industry, Vietnam steel market