General Director of Kyoei Steel Vietnam Co., Ltd (KSVC) Hoshino Yoichi, shared with VIR that, “we have decided to maintain the license as before, we have not altered that decision so far” He confirmed that the investor has spent $3 million to improve soil where the project has been located since 2012.
However, Hoshino Yoichi gave no timeline, only saying that “if the appropriate business conditions present themselves, we will implement the project without further delay,”
As VIR reported previously, the Ministry of Industry and Trade (MoIT) is considering dropping the high-quality steel project from its new master steel plan 2020 with vision to 2030, which is currently being drafted. The project has moved at a snail’s pace since 2012, according to VIR’s MoIT source that declined to be named.
The project, with a capacity of 500,000 tonnes, held its groundbreaking ceremony in March 2012 and was expected to operate commercially from 2015, becoming the second-largest steel project in Vietnam’s northern region, after the Thai Nguyen steel project. Its capacity could rise to about one million tonnes of steel bar products when in full production.
Hoshino Yoichi explained that the business conditions have changed dramatically when compared to the time of the initial investment decision, four years ago.
Steel demand in Vietnam has shown a trend of recovery, as steel consumption in 2015 in Vietnam was 8.87 million tonnes, which was up 28 per cent in comparison with 2014, and is anticipated to develop further by another 15 per cent in 2016, according to KSVC.
“Meanwhile, authorities have permitted new large scale-investments in steel projects since last year, so even if demand for steel increases, the steel production can also increase definitely, this is contrary to our expectations,” he added.
The MoIT predicted that Vietnam steel sector will see their overall manufacturing output rise over the next five years.
Commenting on this issue, former chairman of Vietnam Steel Association (VSA) Pham Chi Cuong, who has years of experience in Vietnam’s steel sector, said that there is a need to adjust the master plan based on the current context of the steel sector and the use of electricity.
“Some projects are on track, however, in this case careful consideration is needed as KSVC entered Vietnam early on and has a good reputation for quality and experience,” Cuong suggested that “the ministry should guide investors into the production of high-end steel products that Vietnam currently imports for mechanical engineering,”
Kyoei Steel officially entered Vietnam in 1994 as Vina Kyoei Steel, established as a joint venture company between Kyoei Steel, Mitsui & Co. and Itochu Corporation (Japan), and Vietnam Steel Corporation. Its factory is located in the Phu My Industrial Zone in Ba Ria-Vung Tau province.