Hoa Sen Group and Hoa Phat Group (HPG), among the big names in the local steel industry, have proposed taking over the Guang Lian steel mill project in Dung Quat Economic Zone in the central province of Quang Ngai, the Saigon Times newspaper reported.
The proposals came several months after its Taiwanese investors reported that they could not arrange finances for the project, which has come to a standstill since it was licensed in 2006.
However, the provincial authorities are inclined to pick HPG for the project, arguing that experienced HPG is financially capable and is operating a 1.2-million-ton mill in the northern province of Hai Duong.
According to a plan submitted by HPG, the steel mill project will have a capacity of four million tons per year and an investment of between $2 billion and $2.5 billion, of which 65% will be financed by the group itself.
The group has also asked for similar tax incentives the authorities previously granted to the foreign investors, including a corporate income tax rate of 10% during for 30 years, or half of the current rate.
The Guang Lian steel project was first licensed to Taiwanese-owned Tycoons Vietnam Co., Ltd in 2006 with an estimated cost of over $1 billion. Its initial capacity was proposed at five million tons of steel a year.
Tycoons Vietnam Co. partnered with E-United Group, a steel conglomerate also from Taiwan, soon after that, raising the plant’s investment to $3.3 billion, with its designed output remaining unchanged.
In 2011, the investors asked for permission to raise the investment cost of the project to $4.5 billion. However, authorities turned down the request, saying the investors failed to prove financially capable.
Japan’s JEF Steel Corp. showed interest in the project in 2012, but stepped out after two years of studying its feasibility. E-United then proposed cutting the investment to $2 billion, but in mid-2015 reported to provincial authorities that that it could not fund the project.