Vietnam’s $1.9 Billion Steel Project to Reduce Threatened Scrap Import Gap

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Researched by Industrial Info Resources (Sugar Land, Texas). The Vietnamese government will restrict the importation of scrap metal in July in an attempt aimed at minimizing the environmental impact of scrap metal stockpiles. The Vietnam Steel Association (VSA) said that companies were holding off on the renewal of scrap import contracts in view of the imminent ban. The companies that smelt imported scrap metal to produce ingots that are then sold to steel companies will feel the negative effect of the move said VSA Chairman Pham Chi Cuong.

As the steelmakers do not have the financial resources to import the scrap steel, the ban could affect their ability to guarantee a reliable supply of steel. The result would be a switch to increased import of ingots presenting a volatile price challenge. Despite the import restriction, Vietnam is expected to import one million tons of scrap in 2006 and two million tons in 2007. The domestic market generates 800,000 tons of scrap per annum.

Scrap imports will produce 1.5 million tons of ingots in 2006 and 3 million tons in 2007. The Vietnamese industry should produce about 3.5 million tons of steel this year and import as much as 3.7 million tons with demand boosted by robust industrial development and rising living standards for the country’s 70 million plus population.

In a development that will assist in closing the local steel production/ demand gap, a consortium of Taiwanese and Australian steel manufacturers has submitted a proposal to build a $1.9 billion steel mill and production complex adjacent to the Thach Khe mine in the central province of Ha Tinh reports the Vietnamese Ministry of Planning and Investment. The Taiwanese companies Sun Steel and Koncett, with the Australian company Mimetan, have applied for the permits and funding for what would become Vietnam’s largest steel project. It would be the first time Koncett and Minmetan have invested in a Vietnamese project.

Sun Steel has already invested $130 million into a steel ingot factory in the southern province of Dong Nai. This project, which was initiated in 2004, should start producing 500,000 tons of steel ingots this year and rise to a total production of 3 million tons by 2008. This plant will also produce zinc-plated corrugated iron and other steel by-products for domestic and foreign markets with a workforce of 1,000 workers. Sun Steel has also been implementing a plan to increase the annual capacity of its steel factory in Binh Duong province to one million tons, from 300,000 tons per annum in 2004. Sun Steel is a joint venture between Taiwan’s Sun Steel Company, Limited (Taipei) and China’s Laiwu Steel Corporation (SHANGHAI:600102).

The new project planned by the Taiwan-Australian consortium at Thach Khe will be designed to produce 2.4 million tons of steel, 1.7 million tons of pig iron and 4 million tons of ingots per annum. The Thach Khe mine has estimated iron ore reserves of 265.6 million tons.

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