Posted on 05 Nov 2015
Vietnamese steelmaker Hoa Sen Group is likely to take over the $3-billion central Quang Ngai province-based Guang Lian steel project, which had Taiwan’s Tycoons Group Enterprise Co Ltd as the original investor, as per local media reports.
The decade-old abandoned project had earlier caught the attention of E-United Group, another Taiwanese company, and Japan’s JFE Steel Corp. However, both investors have disinvested from Guang Lian.
Originally registered with an investment capital of $1.7 billion by Tycoons, E-United purchased a 90 per cent stake in the project and committed another $1.3 billion in investment. But the company announced its withdrawal from Guang Lian in July this year.
Last year, JFE Steel had also quit the project, and had instead invested 30 billion Yen for five per cent stake in the Formosa Ha Tinh.
Meanwhile, the Vietnamese producer’s interest in Guang Lian is seen as a bid to capitalise on what the other investors have invested in. Although the construction of the factory has not started, E-United reportedly spent tens of million US dollars to do site clearing works.
In addition, if Hoa Sen Group does not ask to revise the investment license, it will enjoy tax relaxation that was entitled to the project when it was registered in 2006. Although the privelates may be offset by the common major hurdle, faced by this industry in Vietnam – the excess supply from China, which has caused a glut in the global market.
Hoa Sen Group is one of the leading steel manufacturer with 20 years of operations in the Vietnamese market.
In June, the company began construction for a VND5 trillion ($223.2 million) milling facility in central Nghe An province. However, it has never deployed any projects as large as Guang Lian.
According to the company’s latest financial report, its net profit in this fiscal year ending September 30 touched VND731 billion, soaring 85 per cent year-on-year. During the period of the first nine months in 2015, Hoa Sen Group emerged as the second largest player in the local steel market with a 20 per cent share, while the number one position is occupied by its rival Hoa Phat Group (22.8 per cent).
