Vietnam Industrial Parks InfoGate ! Industrial Zones ! Export Processing Zones ! Taiwan firms to restart huge steel plant early next year

Lipi Hsien, chairman of Guan Lian Steel Vietnam, has sent a report to Quang Ngai Province’s government about the process of building the steel plant at Dung Quat Economic Zone, clarifying that work will be resumed early next year for completion in mid-2013; according to website of the zone.

Changes to the project, which got off ground in 2007; were also mentioned in the report; butthe final output would stay at five million tons a year as earlier defined.

Le Van Dung; deputy director of Dung Quat Economic Zone Authority; told the Daily on the phone yesterday that the area for the factory and a private port would be expanded to 537 hectares from the initial 460 hectares. Besides, equipment and technologies for the plant would also have changes.

However, the company only will start work on the first phase of the project on 223 hectares, Dung said. The project is jointly owned by two steel firms from Taiwan, Tycoons and E-United, who have confirmed the information in the report.

The project has experienced a lengthy process since it gained approval.

The initial project was approved in September 2006 for Tycoons as the single investor, who pledged to spend over USD1 billion on the steel plant. In 2007, the investment capital for the project was revised up to more than USD3 billion under a joint investment plan between Tycoons and its Taiwanese peer E-United Steel Company.

The two companies by then had planned to run the first phase of the project in mid-2010 with an output of three million tons of steel ingots and hot-rolled steel rods a year, which would be increased by an additional two million tons in the second phase. It should reach full steam in 2013, and output would be for both local sale and for export.

However, since work on the project was commenced in October 2007, the two investors had not made any further move in carrying out the project. The main reasons, according to Dung of the zone authority; are that it was very difficult to do site clearance and compensation to transfer land for the investors. The investors also had met difficulties during the financial crisis, and coupled with changes to the project’s design, technology and manufacturing line, the process has long been delayed. Dung said that the Dung Quat Economic Zone Authority would hand over all of the cleared land to the investors in the middle next year.

Dung Quat Economic Zone is a destination to some other large-scale steel projects as well.

JFE Steel Corporation, the second largest Japanese steelmaker after Nippon Steel, also has plans to develop a huge steel mill project in the zone.

Representatives of the corporation have met with authorities of Quang Ngai Province to discuss the project. The corporation will spend some USD5 billion on the project with the first-phase annual capacity of five million tons, mainly for export.

JFE Steel Corporation plans to set up a company in Vietnam to develop the project on 1,000 hectares in the zone. It will also build a port for importing raw materials, including iron ores and coke, and exporting the factory’s products.

The authority is working with other state agencies to draw up a plan to expand the zone by four times from the current 10,300 hectares to 46,000 hectares to meet demand of investors.