Vietnam rejects Posco steel mill project

The government has rejected a proposal by South Korean steel maker Posco to build a US$5 billion steel mill due to fears it would hurt the environment in Vietnam’s most popular resort area.

According to a government directive dated October 31, Prime Minister Nguyen Tan Dung asked authorities in the south-central province of Khanh Hoa to request Posco to choose another site for its project.

Posco, the world’s fourth-largest steel maker by output, said in April it plans to begin building the plant in Van Phong Bay, one of Vietnam’s most beautiful bays, next year, raising public concern.

The steel mill may have an annual production capacity of 4 million tons, a Posco official said at the time.

Posco is reviewing other sites for the steel mill in line with the Vietnamese government’s request, a spokesperson for the company, said Friday.

“There is no change in our plan to build a plant in Vietnam,” another spokesperson said. “But the project may be delayed because it takes time to look for a suitable site.”

The government also said the Posco mill would affect a government’s project to develop an international container transshipment port in Van Phong Bay.

Earlier this year the port project was brought to a halt as Posco asked for permission to build its plant at the same site.

Khanh Hoa was “Posco’s choice for a location, but Khanh Hoa already has the

Van Phong container terminal port project,” said Pham Chi Cuong, chairman of the Vietnam Steel Association, in a telephone interview.

“The government wants to turn Khanh Hoa into a tourism area, and if a steel plant is built there, it wouldn’t be suitable,” he added.

Apart from the Posco project, the government has approved investments by foreign steel makers of at least $22 billion so far this year, including a $9.8 billion joint venture between Malaysia’s Lion Industries and top state-run shipbuilder Vinashin.

Other projects include a $7.8 billion project by Taiwan’s Formosa Heavy Industries and a $5 billion venture by India’s Tata Steel.