VietNamNet Bridge – Chinfon Cement Company has decided to pull out of a project, which would cost US$200 million in phase one, in Dung Quat Economic Zone in the central province of Quang Ngai.
The Dung Quat Economic Zone Authority said that after reviewing projects at the zone’s southern industrial park and a suggestion from Chinfon Cement, it had revoked the investment certificate of the company’s Dung Quat clinker plant.
The investment certificate was awarded two years ago for the company to develop the project with one million tons a year, using 10 hectares of land and water surface in the zone. The project targeted local and foreign invested construction projects in the Dung Quat Economic Zone and neighboring areas, and when put into operation, this would become the second cement project in the zone.
The first project was being developed by Hanoi’s Dai Viet Investment, Material, and Construction Joint Stock Co. at a total cost of nearly VND200 billion. But the project was faced with site clearance and compensation problems.
To make matters worse, Chinfon encountered more difficulties during the economic meltdown, so it had to delay the project for one year. Now, it still cannot get the project moving again.
Nguyen Xuan Thuy, head of the zone, confirmed the information with the Daily on the phone. It is necessary to withdraw the investment certificate of the project to make room for other investors, he said. Some investors have proposed huge projects but the zone is full at the moment.
However, he noted, the zone would not welcome other cement plant projects because the Government stopped licensing new projects in this industry until 2020.
Besides the tile and steel industries, cement manufacturers are struggling with an overcapacity. By June this year, Vietnam had had 108 operational cement production lines, with total designed capacity of 65 million tons a year, double the number recorded four years ago.
Although a number of plants have yet to operate at full capacity, excess capacity has gradually loomed large as demand for this year is forecast at merely 58 million tons. Cement manufacturers have predicted there will be a surplus of at least five million tons.
Cement production capacity will soar as new plants are still under construction. The industry is expected to turn out 130 million tons by 2020, making Vietnam the world’s third biggest cement producer after India and China.
To cope with the overcapacity, the Ministry of Construction and cement enterprises are trying to expand their export markets.
As for the Dung Quat Economic Zone, Quang Ngai authorities have asked the Ministry of Construction for permission to quadruple the size of the zone, from the current 10,300 hectares to 45,332 hectares, to meet investor demand.
Under the proposal the zone would incorporate another 24,280 hectares of land and 10,752 hectares of sea surface, including Ly Son Island, by 2025.
In the zone 114 projects have been licensed with total registered capital of over US$10 billion. There are 53 projects operational, creating more than 11,000 jobs. In the first seven months this year, the zone attracted seven projects worth nearly VND6.4 trillion, or some US$330 million.
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