Vietnam axes Vinashin steel project with Malaysia

Vietnam has cancelled a US$9.8 billion joint steel project between troubled state shipping company Vinashin and Malaysian steel giant Lion Group, an official said Thursday.

The project in the southern coastal province of Ninh Thuan began in November 2008 and encompassed a steel mill with initial capacity of 4.5 million tons as well as power plants and a sea port.

Vietnam Shipbuilding Industry Group (Vinashin) and Lion Group were to develop the project, but a government document seen by AFP Thursday says the investment license has been revoked.

“With the revoking of the license, this steel project will be completely abolished,” Pham Dong, head of the Ninh Thuan planning and investment department, told Dow Jones Newswires.

Investors “did not fulfill commitments for implementation of the project as stated in the investment license,” a statement posted Wednesday on the government website said.

The Lion Group held a 75 percent stake in the project but had difficulties arranging funding, Dong explained, adding there was “trouble” with the chosen technology.

A Lion Group spokeswoman reached by AFP in Malaysia said the company had “not received any notifications from (the) Vietnam government pertaining to the matter.”

In December Vinashin, whose debts of more than $4 billion pushed it to the brink of bankruptcy, reportedly defaulted on the first $60 million installment of a $600 million loan arranged by Credit Suisse in 2007.

Police are investigating and have arrested Pham Thanh Binh, Vinashin’s former chairman, who is accused of violating state economic management regulations.

Others have also reportedly been held in the case, which threatened the country’s global financial reputation.

Vinashin, whose interests spanned a range of sectors from ports to real estate, is being restructured.