VietNamNet Bridge - While foreign investors all have withdrawn from the Guang Lian project, the Hoa Sen Group will develop a steel complex, which was a major surprise to everyone.

Hoa Sen plans to develop Guang Lian project in Dung Quat Economic Zone in Quang Ngai province after E-United gave up the project. The withdrawal leaked from a document the Quang Ngai provincial authorities had sent to the conglomerate.

The document said Hoa Sen and the provincial People’s Committee would sign a cooperation agreement in many fields, including the steel project.

This is seen as a positive sign for the revival of the $3 billion steel project which has been on paper for 10 years.

In 2006, Taiwanese Tycoons received an investment license to develop Tycoons steel project with the initial investment capital of $1.7 billion. Later, 90 percent of the project’s stakes were transferred to E-United, also from Taiwan, which then raised the registered investment capital to $3 billion and renamed the project Guang Lian.

However, due to the global financial crisis and the investor’s limited financial capability, the project could not be implemented. 

In 2012, JFE Steel unexpectedly announced it would buy controlling stakes in Guang Lian and decided to raise the capacity from 5 million to 7 million tons a year. 

JFE Steel also gave up the project last year. Instead, the group decided to spend $225 million to buy 5 percent of stakes in Formosa steel complex in Ha Tinh province.

As such, both large steel groups from Taiwan and Japan have left the project, and now Hoa Sen plans to jump in.

However, an analyst noted the document from the Quang Ngai provincial authorities to Hoa Sen Group showed that Hoa Sen still has no detailed plan for the investment deal.

In the document, the provincial authorities advised Hoa Sen to set up a factory with a capacity of 3-5 million tons a year. This means that Hoa Sen still has not made decision on the scale of the steel mill. 

It is also still unclear how Hoa Sen will invest in Guang Lian: will it receive the stake transfer from E-United, or will it begin  investments only after E-United dissolves the subsidiary in Quang Ngai?

Analysts commented that Hoa Sen of Le Phuoc Vu, one of Vietnam’s most influential businessmen, will enjoy big advantages if it takes over Guang Lian. At least, it will be able to save money and time on site clearance.

NCDT