Ca Na Steel - US$9.8-billion steel mill project gets license today

Ninh Thuan Province today licenses the biggest-ever steel project, also the most capital-intensive FDI project in the country, to develop a giant steel complex and supporting facilities whose total capital amounts to nearly US$10 billion.

The provincial government awards the investment certificate to Vinashin-Lion Steel JV Limited, which is a joint venture between Maju Stabil Sdn. Bhd, a unit of Malaysia's Lion Group, and Viet Nam Shipbuilding Industry Group (Vinashin). The foreign partner holds a 74% stake and Vinashin the remaining 26%.

The two partners will spend around US$9.8 billion for the project covering 1,650 hectares in Minh Phuoc District in the central coast province.

The steel complex, to be developed in four phases, will have a total production capacity of 14.4 million tons of steel products per year. In the first stage, which requires US$2.7 billion of invested capital and takes three years for completion, the annual output is 4.5 million tons. The project will also include supporting works, including two 1.450MW power plants and a sea-port with an annual capacity of 50 million tons.

The feedstock for the operation of the complex will be iron ores to be imported and coke to be bought domestically. Part of the steel output is to serve domestic demand, especially for the shipbuilding industry. The province said that this would be the biggest foreign-invested project to be licensed by the province and also the most costly project in the entire country.

Earlier, another giant steel project has been licensed to Taiwan's Formosa Heavy Industries Corp. in the central province of Ha Tinh. The Taiwanese investor, obtaining the license in June, commits to build a deep-water port and a steel complex project with total capital of US$7.9 billion.

The iron/steel complex and Son Duong Port by Formosa are located on 3,000 hectares in Vung Ang Economic Zone, and will a have total production capacity of 15 million tons per year when it is fully commissioned. As many as 10,000 workers will be employed in the project.

Back to the new steel project, Ninh Thuan authorities pin big hopes on this mammoth complex, expecting it to create a strong push for the province's socio-economic development.

However, there are certain concerns over the success of this project due to the lack of proven experiences from the investors.

According to the Viet Nam Steel Association, Lion Diversified Holding Behard is not listed among the world's large steelmakers while Maju Stabil Sdn. Bhd Company was just established last year. Meanwhile, Vinashin specializes in shipbuilding and is inexperienced in producing steel and electricity.

Viet Nam recently has attracted many big foreign invested steel projects costing billions of dollars each.

The long list, albeit positive in a sense that Viet Nam is attracting large amounts of foreign direct investment, has raised concerns over a redundant supply, and prompted suspicion over the possibility of such projects being put into full steam.

Pham Chi Cuong, chairman of the Viet Nam Steel Association, earlier said the country would face a glut of steel products in the years to come if all of the steel complexes are put into place.

Scheduled to be built in the first quarter of 2009, the first phase of Ca Na steel complex is expected to be completed in 2010.

In the approved steel industry development strategy, the demand for finished steel in Viet Nam will reach 10-11 million tons by 2010 and over 20 million tons by 2020. (SGT)