Vietnam reviews new steel complex just as sector stumbles

The local government in central Vietnam's Binh Dinh province has approved plans for the construction of a 5.4 million tonnes/year steel complex for the production of flat and long products, together with a major port complex, according to local reports. The announcement comes at a time when the country's steel sector is seeking central government support as mills struggle with high costs and weakening demand.

The proposed Long Son Iron & Steel Complex, to be built in Binh Dinh's Hoai Nhon Town on a site spanning nearly 470 hectares, will cost VND 53.5 trillion ($2.16 billion), with the investment divided into three phases, according to local media Saigon Times. The approval was granted on November 15, but no timeline was given for the start of construction or possible commissioning.

The steel complex is being touted as boosting the province's economic growth and providing over 7,000 jobs but the project is off to a rocky start. Local reports note that provincial authorities had earlier studied building the plant further south near two coastal villages but finally abandoned those plans in October in the face of strong opposition from local residents, concerned about the destruction of forest areas to make way for the plant.

The approval for Long So to proceed was also granted at a time when the Vietnamese steel industry is struggling to cope with a severe market downturn. Leading steelmakers Hoa Sen Group and Hao Phat Group recorded huge losses during the July-September quarter which they blamed on rising costs, especially for coal, tighter credit and rising interest rates.

In late September, Pomina Steel in southern Vietnam idled a blast furnace, while earlier this month, Hoa Phat announced it would idle two furnaces this month and a third next month to reduce its mounting losses, Mysteel Global understood.

Meanwhile, the Vietnam Steel Association is pressing the central government in Hanoi to provide financial help to steelmakers and speed up the launch of public works projects, according to Vietnam News Service.

Even before the approval was granted for the Long Son complex to proceed, new plants boasting a combined steel capacity of over 19 million tonnes/year are planned for construction in Vietnam by 2027, and already doubts are emerging about their feasibility, Mysteel Global noted.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.