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Home / Industry Report / Steel Industry

 

STEEL INDUSTRY

With an annual growth of 40 percent, Viet Nam’s steel Industry is becoming a beacon for foreign investment. After successfully hooking up on joint ventures in the northern port city of Hai Phong and Ho Chi Minh City, the Posco group from the Republic of Korea (RoK) made a ground breaking on a steel plant in Phu My 2 Industrial Zone in the southern Ba Ria-Vung Tau province in August. Construction of the 1.13 billion USD Posco Viet Nam plant, which will be capable of churning out 3 million tonnes of rolled steel per year, is scheduled to begin operations by late 2009 and to generate jobs for 10,000 workers.

The Viet Nam Shipbuilding Industry Group (Vinashin) is also teaming up the RoK giant on a steel complex in central coastal Khanh Hoa province with an output capacity of 5 million tonnes of steel plates and rolled steel per year.

Meanwhile, India-based Essar has signed a deal with the Viet Nam Steel Corporation and the Viet Nam Rubber Corporation to build a 527 million USD steel plant in Ba Ria-Vung Tau province, which will be capable of turning out 2 million tonnes of rolled steel per year.

India’s TaTa group – one of the world’s biggest steel groups – has inked a Memorandum of Understandings to invest in a 3.5 billion USD steel complex in central Ha Tinh province with an annual output capacity of 4.5 million tonnes.  

The market also witnesses a fierce competition among local producers. The Thep Viet Joint Stock Company has invested 100 million USD in a steel ingot plant in Phu My Industrial Zone with a capacity of 500,000 tonnes annually.  The plant, to be installed with the world’s most advanced equipment, is currently undergoing trial runs and is expected to be officially put into operation by late 2007. The company also plans to build a 1.5 billion USD rolled steel plant by 2015 with an annual capacity of 3 million tonnes.  

Care needs to be taken when investing in steel in order to ensure the sustainable development of the industry so local producers remain competitive with foreign partners in the region and the world at large. The Government approved a blueprint for steel development during the 2007-2025, which requires producers to meet local demands with surplus left for more export. Under the blueprint, an estimated 10-12 billion USD will be needed to produce 12-15 million tonnes of steel ingot and 19-22 million tonnes of steel products by 2025, as local producers hope to export between 0.5-0.7 million tonnes of steel and iron products.   

Environment issue

The Vietnamese steel industry needs to apply environmentally-friendly technology to boost its competitiveness and integrate successfully into the world economy. Domestic small and medium-sized steel manufacturers were currently using out-of-date production technologies.  The experts recommended that local manufacturers apply the fastmelt technology as it was the best-suited to the needs of the country’s developing steel industry. This technology would allow Viet Nam to use all its small steel mines, they said, to meet the target of producing 10 million tonnes of steel by 2010. 

However, not all Vietnamese steel manufacturers can afford to install the technology, which costs about US$250 million. It is suggested that small and medium-sized steel manufacturers group together to buy the equipment. 

Material shortage 

Experts said the country is facing a shortage of ingot steel, which is used by steel rolling mills. This was limiting the Vietnamese steel industry’s ability to compete on world markets.The ministry of industry and trade would submit a new long-term plan to the Government to make the industry more competitive. At present a license for a steel ingot manufacturing plant has been granted.  

Source: Ministry of Industry and Trade (2007)

 

 

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