Huge steel project may lose investment certificate
Huge steel project may lose investment certificate
The investment certificate of Guang Lian Steel’s big-ticket steel project in Dung Quat Economic Zone in Quang Ngai Province would be revoked if the investor fails to prove its financial capability this month.
A source from the Dung Quat Economic Zone Authority told the Daily on June 3 that a deadline had been set. The authority said it and the government of Quang Ngai Province had told Guang Lian Steel to show credit contracts for the project this month; otherwise, it would lose the investment certificate.
The source stressed it was more important for the investor to prove its financial capability than the majority shareholder E-United’s request to scale down the project’s capital to US$2 billion from US$3.3 billion.
“Management agencies will deal with the slow-moving project based on the existing investment regulations if the investor continues the delay,” the source said.
The project was licensed nearly nine years ago but is now facing a mounting roadblock after Japan’s JFE Steel pulled out of the Guang Lian steel manufacturing venture with Taiwan’s E-United last year.
The Vietnam Steel Association has expressed concern over the project, saying the investor always proposes partner change or investment capital adjustment whenever the authorities threaten to withdraw the investment certificate.
The investor is said to have spent some US$42 million on housing facilities for workers, ground leveling and fence building, among others, since construction began in 2007.
In 2006, Taiwan’s Tycoons proposed the project with an annual output capacity of five million tons and total capital of over US$1 billion. E-United joined the project later.
The investors decided to revise up the project’s registered capital to US$3.3 billion but maintained its production capacity and renamed the project as Guang Lian Steel. E-United became the major investor with a 90% stake while Tycoons held only 10%.
In 2011, the investors proposed revising up the annual capacity of the project from five million tons to seven million tons and increase the investment cost to US$4.5 billion. However, the Dung Quat Economic Zone Authority did not issue a revised investment certificate as the investors failed to prove their financial capability though the Government agreed in principle on the request.
In 2012, when the investors had trouble raising capital, Japan’s steel maker JFE came and signed a memorandum of understanding with E-United in April of that year. But two years later, JFE announced it would not participate in the project.
After JFE’s withdrawal, E-United sought approval from the authorities to reduce the pledged capital to US$2 billion and turn out steel sheets instead of technical steel for the mechanical engineering sector as this would help cut investment capital.
