Quang Ngai determined to revoke Taiwanese-invested US$4.5 billion steel project

Local leaders also said they had sent dispatches to relevant ministries and agencies to ask for their comments and propose to stop Guang Lian project by June 60.

 

The decision was made after the Taiwanese investor held a vast area of clean land for 10 years, causing great waste for the province. Guang Lian did not agree with the conclusion and protested Quang Ngai authorities for publicly releasing the conclusion.

 

Dung Quat Guang Lian steel project was certified in 2006, located in Dung Quat Economic Zone, invested by Tycoons Group from China, with an initial capital of $556 million.

 

This project’s size and design capacity was adjusted several times In 2008, Tycoons partnered with E-United (Taiwan) and increased the capital to $4.5 billion, and capacity of 7 million tonnes. To create favorable conditions for investors, the economic zone management board cleared land and handed over 337 hectares of land to the investors.

 

In April 2012, two Taiwanese investors invited JFE Group (Japan) to join the project but after some time studying the feasibility of this project, in September 2014, JFE announced that it would not participate in this project. Then the investors reduced investment to $2 billion to produce steel plates instead of technical steel.

 

In July 2015, Guang Lian admitted in written documents to Quang Ngai authroties that it was unable to arrange funding for the project. The project stopped in mid 2014. As of September 2014, $42 million was invested in this project, including VND175 billion (over $8 million) from the state budget for site clearance. Quang Ngai Provincial People’s Committee held many meetings on the termination of the project to avoid land waste.

 

In late 2015, a domestic firm - Hoa Phat Group asked for permission from Quang Ngai to invest in a steel project with a total capital of about $2-$2.5 billion, a capacity of 4 million tons per year, and it needed 300-350ha of land that was granted to Guang Lian.

 

The decision to withdraw Guang Lian project was made in the context of oversupply of steel at home and abroad.

 

Also in the central region, the public is paying attention to another big steel project - Formosa (with designed capacity of 10.5 million tons a year for the first phase and 22 million tons for the second phase) in all aspects of production and the environment.

 

Vietnam is located near the giant steel production market – China – so the feasibility of the Dung Quat Guang Lian project is rated very low. The Vietnam Steel Association "called for help" many times as cheap Chinese steel flooded into Vietnam, pushing many local businesses to the brink of bankruptcy.

 

In addition, under the Free Trade Agreement between ASEAN and China, in 2018 the import duty on alloy steel will be 0%, giving more lowcost advantages to Chinese steel.