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Hoa Phat hopes to take over Quang Ngai steel project

13/10/2016

The Hoa Phat Group is seeking permission from the Quang Ngai Provincial People’s Committee to take over the Guang Lian Dung Quat steel mill project in the central province, which has been delayed for ten years.
Hoa Phat hopes to take over Quang Ngai steel project
Group proposes building $3 billion iron and steel plant on site of stalled steel project in central province.

“The Management Board of the Dung Quat Economic Zone has sent documents to authorities seeking opinions before submitting a proposal to the government for approval due to the large scale of the project,” Ms. Ho Minh Hoa, Head of the Foreign Economic Relations Division at the Quang Ngai Department of Planning and Investment, told VET on October 11.

The Hoa Phat Group plans to build a $3 billion iron and steel complex at the Economic Zone with a capacity of 4 million tons a year, divided into two phases and with an operational duration of 70 years, Ms. Hoa said.

If given the go-ahead the steel plant is expected to earn annual revenue of $2 billion, which will significantly increase service and industrial output and contribute around $182 million to the local budget each year when operating at full capacity. The project will also create some 8,000 jobs, according to Dung Quat’s Management Board.

With a large land area and repayments to the previous investor of around $12 million, it has been difficult to find a new investor capable of taking over and continuing the project. Without a new investor the province would be unable to reimburse the Guang Lian Steel Company, according to the Management Board.

Local authorities have proposed offering incentives, including a tax rate of 10 per cent for 30 years in order to increase the competitiveness of the investor due to the large scale of the project. Land tax exemptions for a maximum of 18 years have also been proposed.

The Hoa Phat Group would have to repay site clearance costs of more than $9 million to local authorities, which would then be deducted from rentals.

Last month the Provincial People’s Committee issued a decision revoking the license for the steel plant.

The project was licensed by the Ministry of Planning and Investment in 2006 and was to be developed by Tycoons Worldwide Steel Company Limited, a subsidiary of Taiwan’s Tycoons Group, with initial investment capital of around $556 million.

For nine years the investor continually requested changes to the investment license, including its legal representative, the land use area, designed capacity, charter capital, investment capital, and construction schedule, as well as changing the company name to the Guang Lian Steel Vietnam Company Limited.

Local authorities provided a range of favorable conditions but the investor had only completed investment procedures, built housing for staff, and laid foundations for part of the project. According to the province, the reason for the long delay is the investor’s lack of financial capacity and construction experience.

In order to avoid seeing the land go to waste the People’s Committee decided to put an end to the steel project’s operation, revoking its license and seeking a new investor.

VET | October 12, 2016 12:37 PM

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