No more steel projects, experts recommend

Economists, residents and environmentalists have voiced their concern about the licensing of another steel project, the Hoa Sen Ca Na in Ninh Thuan province, capitalized at US$10.6 billion, or VND230 trillion.

“Vietnam should not make the same mistake made by other countries,” said Nguyen Mai, chair of the Vietnam Association of Foreign Invested Enterprises (VAFIE).

China, for example, is facing a serious steel oversupply. In the last three years, it has shut down a series of steel mills with capacity of less than 2 million tons.

The expert stressed that it is necessary to assess how far Vietnam should develop the steel industry. 

“The steel supply in the world is plentiful and it can be bought easily. Why doesn’t Vietnam gather strength on making high-quality alloys and nano materials and then selling the products to buy steel?” Mai said.

An analyst, sharing the same view with Mai, said as Vietnam is behind other countries in developing industries, it can avoid inaccurate steps taken by the countries. 

He thinks that Vietnam should focus on utilizing advanced technologies to make high-quality alloys which can bring value 5-7 times higher than the profit brought by steel production.

“Vietnam, of course, has to maintain basic industries, but we need to develop the industries at certain levels,” he said.

Regarding the Hoa Sen Ca Na project, he believes that the investor would have to import iron ore, coke coal and all other input materials needed to make steel domestically.

Formosa steel complex in Ha Tinh province, once operational, will focus on making roll steel and high-quality steel and partially satisfy the domestic demand (Vietnam has to import US$5-6 billion worth of high-quality steel every year).

“If we have one Formosa, which can produce high-quality steel, why do we still need another project – Hoa Sen Ca Na, which imports materials to make finished products?” Mai said.

Meanwhile, Hoa Sen Group, the investor of Hoa Sen Ca Na, still insists on pouring money into the steel mill.

The steel production capacity and consumption in Vietnam are still at a low level compared with other countries. 

Hoa Sen cited a report of the World Steel Association as reporting that of the 1.62 billion tons of steel produced globally in 2015, Vietnam churned out 15 million tons, or just one %. 

In ASEAN market, the demand increases by 5.5 % per annum, while the production capacity increases by 2.7 %.