Investors seem to consider Vietnam an ideal place for steel mill projects, which explains why they have brought big projects worth several billion dollars each to Vietnam. However, experts have warned that too many steel mills will lead to waste.
According to the Vietnam Steel Association (VSA), Vietnam now has to import 3.5mil tonnes of steel a year. It is estimated that the total demand for plate steel will be some 4.7mil tonnes by 2010, 7.2mil tonnes by 2015, and 10.2mil tonnes by 2020. The demand for plate steel accounts for 50% of the total demand in Vietnam.
If counting the demand for construction steel, which is expected to see the same growth rate in demand as plate steel, Vietnam will need 10mil tonnes of steel of different kinds by 2010, 15mil tonnes by 2015 and 20mil tonnes by 2020.
Such a big demand can be seen as a big opportunity for investors and the steel industry, which explains why foreign investors are rushing to set up steel mills in Vietnam. However, experts have warned that too heavy of investment in the steel industry will cause waste as supply will exceed demand.
The Vietnam Steel Corporation (VSC) on May 29 signed a memorandum of understanding on the implementation of the $3.5-4bil Ha Tinh steel complex project with India’s Tata group, the sixth-biggest steel group in the world. Once operational, the steel mill will churn out 4.5-5mil tonnes a year.
Another big steel project is waiting for licencing – the one to be run by the joint venture between Korea’s Posco and Vietnam’s Vinashin. The $5bil steel project, expected to be located in Khanh Hoa province, will put out 5mil tonnes a year.
The two projects alone will have the total capacity of 10mil tonnes a year by 2015. If considering the current capacity of 6mil tonnes a year of operational steel mills, and another 6mil tonnes able to be produced by that time, Vietnam will be able to produce 20mil tonnes of steel of different kinds by 2015.
Other big steel projects are to be kicked off in some days. These include the one invested in by Tycoons Group International ($1bil), which was licenced in September 2006. The 2mil tonne/year steel mill invested in by India’s Essar and VSC in Ba Ria-Vung Tau is awaiting a licence. The construction of a series of smaller projects, capitalised at $30-60mil, is to start in some days
Source: VNE
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