Sunday, September 16, 2007

Vietnam's growing steel industry an environmental concnern

Steel industry urges prudent licensing, fears overabundance

Vietnam’s steel industry association has urged the central government thoroughly consider licensing mammoth steel projects that might produce a surplus.

In a recent petition to the Prime Minister Nguyen Tan Dung, Pham Chi Cuong, chairman of Vietnam Steel Association (VSA), expressed industry concerns over the massive amount of approvals given to major to steel complex proposals by foreign investors and joint ventures recently.

According to industry’s statistics, the country will need an estimated 20 million tons of steel products by 2020.

But the statistics said that both foreign and domestic steelmakers will provide over 20 million tons by 2015.

The VSA also warned that many projects use Chinese technology that causes massive pollution.

Five steel complexes and several smaller plants worth billions of US dollars in total were approved in the first half of the year. All of which are proposed to churn out between 3 and 5 million tons annually when in place 2015.

The influx

The country’s steel sector is likely to become a beacon for foreign investment fuelled by an estimated annual growth of 40 percent.

India-based Tata – one of the world’s largest steel producers – and state-run Vietnam Steel Corp (VSC) will build a $3.5 billion steel complex in the central Ha Tinh province, 340km south of Hanoi.

It is designed to produce 4.5 million tons of products annually.

Essar Global Limited, another Indian steel marker, has joined forces with VSC and Vietnam Rubber Group to build a $527 million hot-rolled steel mill in Ba Ria-Vung Tau province.

As the first plant to produce hot-rolled steel in Vietnam, it will have an installed capacity of 2 million tons per year and use billets imported from India.

South Korea’s POSCO Group has recently started work on a cold-rolled steel facility in its steel complex at a total investment of $1.13 billion in the Ba Ria-Vung Tau province.

The world’s third-largest steel maker is also planning another steel complex at a cost of $4.5 billion in the central Khanh Hoa prince with annually capacity of five million tons.

Additionally, Thai company Tycoons Worldwide Steel Group has applied to up its $1.1 billion investment in the central Dung Quat steel complex, Quang Nam province. to $1.8 billion.

Steel makers in the country had a combined annual production capacity of some 6 million tons by late last year, according the VSA.

But Vietnam’s partial dependence on steel billet imports has made local-made steel products less competitive as compared to imported products.

Source: Tuoi Tre, Thanh Nien – Compiled by Dong Ha