Steel-makers need iron resolve
Steel-makers need iron resolve
Domestic steel-makers have asked the Vietnamese government to curb iron ore exports amid the scarcity concerns.
Pham Chi Cuong, chairman of the Vietnam Steel Association (VSA), said domestic steel-makers were constantly threatened by the shortage of iron ore.
Van Ba On, deputy general director of Vietnam’s leading steel producer Vnsteel, said its total demand of iron ore in 2014 was 2.2 million tonnes, of which domestic supply could meet 1.3 million tonnes, with the rest imported.
Vnsteel’s Thai Nguyen expanded steel facility with the total investment capital of $192 million, one of the steel maker’s priority projects planned for the 2012-2015 period, was designed to produce 500,000 tonnes of billets per year so it would need at least 50 per cent of iron ore sourced domestically. The project is now under construction.
Hoa Phat Steel Joint Stock Company, a member of Hoa Phat Group - one of the leading private economic groups in Vietnam, which now has a nearly 20 per cent of domestic steel market share, is in a similar situation. The firm has proposed the Vietnamese government to ban iron ore exports. To this end, Hoa Phat said it could buy all the domestic semi-processed iron ore supply at prices even higher than export ones.
It is estimated that Hoa Phat would need about 1.5 million tonnes of iron ore per year.
A source at Taiwan’s Formosa Plastic Group, which is constructing a $9.9 billion integrated steelworks complex in central Ha Tinh province’s Vung Ang Economic Zone, said that Formosa and domestic firms were seeking iron ore supply from Thach Khe, Vietnam’s largest iron ore deposit.
Thach Khe is said to have the total reserves of around 544 million tonnes, of which at least 300 million tonnes of which was thought to be commercially exploitable. The Thach Khe mining project has been at standstill.
Formosa Plastic Group now plans to import iron ore from Australia and buy 10 per cent of its needed material from the domestic supply.
In response to the VSA’s proposal, the Ministry of Industry and Trade (MoIT) said the export of iron ore last year was aimed at clearing high inventories and tackling difficulties facing mining firms.
However, a source of the MoIT said that iron ore exports could immediately stop when domestic steel makers’ demand for iron ore increased so as to make the both ends meet.
In a recent development, the MoIT also urged iron ore suppliers to prioritise domestic steel-makers before drawing up export plans.
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