[www.ferro-alloys.com] Vietnam's two largest steelmakers are readying to make multibillion-dollar capacity investments as the Southeast Asian nation tries to build up a domestic counterweight to its high dependence on Chinese steel.

Second-ranked Hoa Sen Group plans to spend $10 billion on production facilities in southern Vietnam's Ninh Thuan, taking advantage of the province's deep-water ports to import raw materials and export finished steel.

Construction will begin next year. Expected to go into operation in stages starting in 2019, the additional capacity is forecast to more than quadruple Hoa Sen's total to 16 million tons a year in 2031.

Hoa Sen has not revealed detailed plans for the new facilities, but they appear likely to feature a blast furnace -- something the country still lacks. A Taiwanese-led project by Formosa Plastics Group to start up Vietnam's first blast furnace has been set back by a toxic waste spill.

Hoa Phat Group, the Vietnamese steel industry leader, plans to build a $2.7 billion steelworks in the Dung Quat Economic Zone of Quang Ngai Province, on a site that a Taiwanese steelmaker had picked for a project that it proved unable to finance.

Hoa Phat aims to start the new steelworks as soon as 2020. Its 4 million tons of annual capacity will lift the group total 130%.

Hoa Phat is also working on a $170 million steel plate mill in Hung Yen Province, near here. That facility, with a capacity of 400,000 tons, is supposed to start production in 2018 and will supply material for construction projects in the Hanoi area, one of the country's biggest markets for architectural steel besides Ho Chi Minh City.

Vietnam's demand for steel is rising as the economy grows at a nearly 7% clip, one of the fastest paces in Southeast Asia. Imports satisfy nearly 60% of this demand. Steel imports jumped 33% last year to 15.7 million tons, 61% of which came from China.

Inflows of cheap steel, driven by Chinese overcapacity, have risen so fast that they have triggered Vietnamese "safeguard" tariffs in some cases. And given the tension with Beijing over competing territorial claims in the South China Sea, Vietnam's government appears eager to reduce dependence on Chinese steel.

Another factor in the Vietnamese steelmakers' planned investments is the trouble surrounding Formosa Plastics Group's blast furnace project in Ha Tinh Province. The Taiwanese company was hit with a $500 million fine at the end of June for pollution from the site -- a penalty that could discourage foreign investment in Vietnam's steel sector.

Expected to start up as early as this year, that facility will have a capacity of 22.5 million tons at full operation, making it the core of the country's steel industry. "Blowing in," as the the initial lighting of a blast furnace is called, was supposed to take place on June 25.

But after fish began dying in huge numbers along Vietnam's coast in April, waste was found to be leaking from an underground pipe at the steelworks. Formosa Plastics Group has repaired the pipe but has yet to receive approval from authorities to start up the facility.

The fine, one of the biggest ever levied against a foreign company in Vietnam, has raised awareness among potential investors of the need for environmental safeguards. Hoa Sen Chairman Le Phuoc Vu said the group's newly planned facilities will feature "modern, environmentally friendly technology," with a particular emphasis on waste treatment and reuse.

Vietnam holds considerable promise as a steel market. Per-capita steel consumption stands at just below 300kg, the point at which demand tends to take off, people in the industry say. Foreign steelmakers will be watching for encouraging signs from the government before venturing in with investment again.

**Article from Internet for reference only

• [Editor:tianyawei]