News Room - Steel Industry

Posted on 25 Nov 2008

Major steel project breaks ground

Construction of the Ca Na Steel Complex, a US$9.8 billion joint-venture project between Malaysia’s Lion Group and the Viet Nam Shipbuilding Industry Group (Vinashin) began yesterday.

 

The building project, the largest-ever of its kind, will be located in Ca Na, in the central province of Ninh Thuan, and will cover 1,650ha of land and 330ha of sea. The complex will have a 50-year operating licence and a production capacity of 14.42 million tonnes of steel per year, providing 50,000 jobs.

 

The Lion Group holds 74 per cent of the venture and Vinashin holds the remaining stake.

 

"The joint venture will combine the strength of two companies, the steel producing expertise of Lion and the shipbuilding expertise of Vinashin, which will greatly benefit the two companies," said William Cheng, chairman and managing director of the Lion Group.

 

Cheng said that despite the fact the steel market has fallen on bad times, he believed the sector would have a bright future when the economy recovered, as steel was essential for the development of many industries.

 

"The complex will not only help Vinashin meet its 2015 target of 60 per cent local product content, but also help develop other industries in the country," said Vinashin CEO Pham Thanh Binh.

 

The complex consists of blast-furnaces, oxygen-transmitting kilns, refining furnaces and hot and cold-rolling mills. There will also be power plants and a deep-water port.

 

The project is divided into four stages and construction will last from 2008 to 2025.

 

In the first stage (2008-2010), which will require $2.75 billion in funds, a complex with a capacity of 4.5 million tons of steel, two thermo-power plants and a seaport, which can handle 15 million tonnes of goods per year, will be put into operation. While the Lion Group is the biggest steel maker in ASEAN, with a turnover of $5.4 billion in the 2008 fiscal year, Vinashin is the world’s fifth-largest shipbuilder, with more than 200 subsidiaries and 28 shipyards.

 

Eight steel joint-ventures, collectively worth tens of billions of dollars, have recently been licensed in Viet Nam.

 

Foreign investors say that Viet Nam offers advantages for big international steel corporations like improved investment climate, stable economic growth, cheap labour and investment incentives.

 

However, earlier this month the Government rejected a proposal by the Posco Company to build a steel complex in Van Phong Bay, as the project would affect the construction of the Van Phong International Port.

 

The project proposal also failed to ensure the region’s environment would be adequately protected, according to the Government’s office.