Revival plan for massive steel plant tests Vietnam after Formosa disaster

A graphic rendition for the Hoa Sen’s steel plant complex in Ninh Thuan Province. Photo by VnExpress
The $10-billion project is reminiscent of the toxic disaster in central Vietnam.

Vietnam, still reeling from a pollution disaster linked to Taiwanese steel company Formosa, is being put to a new “development-versus-environment” test as a long abandoned steel project has been brought back to discussion again.

Hoa Sen Group, one of Vietnam’s biggest steelmakers, reportedly plans to spend US$10 billion on the mothballed project in the central province of Ninh Thuan.

The original plan was developed by state-owned shipping giant Vinashin and Malaysia’s Lion Group, but the foreign investor pulled the plug about one year after the project was licensed in 2008. Local authorities revoked the license in 2011.

Hoa Sen now plans to take over and build the complex project over more than 1,700 hectares (4,200 acres), including a mill with an annual output of 16 million tons and a solar panel plant.

Although the investment has not been officially licensed, Truong Thanh Hoai, in charge of heavy industry at the Ministry of Industry and Trade, said at a recent press briefing that the plant “has government backing.”

“Now is the good time to invest in steel,” Hoai said, as cited by VnEconomy.

He said Vietnam still imports a large amount of steel. On average the industry runs a trade deficit of around $7 billion a year.

Steel import hit 10 million tons in the first six months, up 25 percent from the same period last year, data showed.

Hoai said the country still has billions of tons of iron ores that can be mined and that domestic demand for steel is expected to surge to 27 million tons in the next four years.

But environmental concerns may make all this mathematics less appealing, especially after a steel plant was recently at the center of a major toxic spill scandal.

An estimated 70 tons of dead fish washed ashore along more than 200 kilometers of the coast in Ha Tinh, Quang Binh, Quang Tri and Thua Thien-Hue Provinces in April.

A unit of Formosa Plastics operating a steel plant in Ha Tinh was held responsible for what is thought to be Vietnam’s worst environmental disaster.

The government said the company had discharged waste containing phenol, cyanide and iron hydroxides into the sea. It created a seafood scare across the country, harming the livelihoods of more than tens of thousands of fishermen.

The environment ministry last month announced that the sea is safe for swimming and aquaculture but set no-fishing zones of over 800 square kilometers, saying the environment needs time to recover.

Disaster in the making?

Environment experts and those who with insight into the steel industry now question that if Vietnam wants a similar catastrophe.

Studies by the Vietnam Foundry and Metallurgy Science and Technology Association found that the production of each ton of steel creates around 600 kilograms of solid waste, three cubic meters of toxic sewage and 2.3 tons of poisonous gases.

Pham Chi Cuong, chairman of the association who has more than 50 years of experience in the steel industry, conceded: “Steel production is not friendly to the environment.”

“There is no steel plant that is clean. Where there’s steel, there’s pollution,” Cuong told Thanh Nien newspaper, expressing concerns that Vietnam has not been doing a good job with environment protection. He formerly served as chair of the Vietnam Steel Association.

Insiders are also worried that the new complex will come with supporting facilities which can also be harmful to the environment, including a coal-fired power plant.

Dinh Huy Tam, vice chairman of the Vietnam Steel Association, said that the Formosa scandal is “a big lesson.”

“Vietnam should think very carefully before approving a similar project,” Tam said.

Environment experts are also concerned that the new plant will only exacerbate water shortages in one of the driest provinces in Vietnam.

A report from Ninh Thuan’s environment department last June said that more than 11,000 people in Thuan Nam District, the proposed location for the Hoa Sen project, were usually short of clean water.

The district depends on a few wells for fresh water, but even these sources are unreliable during dry months because of saltwater intrusion. There is tap water but access is limited.

“Water is rare and expensive. We are miserable,” Le Van Duc, a local, told Tuoi Tre newspaper.

To have enough water for daily uses, Duc’s family has to buy 12 cubic meters a month, when the family well is running low. He is usually asked to pay more than VND60,000 for a cubic meter, more than 10 times the national rates.

The new complex, if approved, will certainly need a large amount of water and will aggravate water scarcity in the area.

Pham Van Hau, vice chairman of Ninh Thuan, told Phap Luat newspaper that the province may only be able to meet 13 percent of the steel mill’s water demand.

(By VnExpress)