Long-term investment strategy needed to boost steel industry

15:09 | 09/02/2017 Industry

(VEN) - With the demand for steel on the rise, long-term investment in developing Vietnam’s steel industry has become important. The Ministry of Industry and Trade is urgently reviewing steel production and distribution development plans to 2020, with a vision to 2035.  

Growing demand

According to Vietnam Steel Association (VSA) Chairman Ho Nghia Dung, the Vietnamese market’s steel demand currently accounts for 60-70 percent of the country’s design steel production capacity. Steel sales are expected to increase 10-15 percent per year to meet the needs of economic development and the steel industry needs a long-term investment strategy to satisfy the economy’s increasing demands.

The Ministry of Industry and Trade agrees that the Vietnamese steel industry is capable of meeting all domestic demand for steel billet and construction steel.

But Vietnam has only one hot-rolled steel project - the 7.5 million-tonne per year Formosa Ha Tinh Steel Complex. This project is behind schedule due to various problems. If no additional hot-rolled steel projects are developed, the supply deficit of this product will continue to increase.

Vietnam’s many advantages

According to the Ministry of Industry and Trade, previously, Vietnam had to seek foreign investment for steelmaking complexes because domestic enterprises were financially and technically incapable. The situation has changed as many domestic businesses have developed sufficient capability to develop such facilities using their own resources.

Last year, the Ministry of Industry and Trade began applying safeguard measures to some imported steel products, especially from China, in order to protect and boost the development of its domestic steel industry.

Vietnam has a large iron ore reserve of about 1.3 billion tonnes. Notably, investment preparations related to the 550 million tonne Thach Khe iron mine have been done.

According to the Ministry of Trade and Industry, the country needs steelmaking complexes that can turn out 7-10 million tonnes per year from iron ore extracted from Thach Khe and other mines annually. These complexes could contribute to reducing the deficit of trade in steel by US$3-4 billion annually, increasing the country’s internal resources and ensuring a strong defense industry.

Vietnam also has rich natural resources including limestone, dolomite, and nonferrous metal ores (chrome, nickel, manganese and others) that can be used for steel production.

Deep water ports and low labor cost are also Vietnam’s strengths. With more than 3,000 kilometers of coastline and numerous deep water ports, Vietnam has the conditions to build large steelmaking complexes, which can ensure economic efficiency and environmental safety, in areas like Nghi Son, Dung Quat and Ca Na.

Minister of Industry and Trade Tran Tuan Anh said that steel projects must strictly observe investment, technological and environmental protection (including waste treatment) processes, while relevant state authorities will strictly control waste discharge and waste treatment to prevent untreated wastes from being discharged into the environment.

Thu Ha