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Hoa Phat Group launches steel mill project in Quang Ngai province

Released at: 21:30, 07/02/2017

Hoa Phat Group launches steel mill project in Quang Ngai province

Photo: Duc Anh

The project will create thousands of jobs and contribute millions of dollars to the State budget.

by Quynh Nguyen

The Hoa Phat Group (HPG) has officially announced the establishment of the Hoa Phat Dung Quat Joint Stock Company with a charter capital of VND10 trillion ($440 million). It specializes in iron and steel production, iron ore, metal, and coke mining. 

The large steel manufacturer also received an investment registration certificate for the Hoa Phat Dung Quat Steel Mill Complex project with a capital of VND60 trillion ($2.6 billion) on February 6. The project received the government’s approval on January 25, based on the Guang Lian Dung Quat steel mill project that was delayed for ten years in central Quang Ngai province.

The complex, with a capacity of 4 million tons per year, is scheduled for completion within four years. It sits on a site of nearly 372.7ha, of which nearly 340ha will be earmarked for factories. Around 27ha is for specialized ports.

During the first stage, the complex will churn out 1 million tons of construction steel and 1 million tons of rolled steel. Later on, two million tons of rolled steel will be produced during the second stage. 

After being put into operation, it is expected to make an annual revenue of nearly $2 billion, generate jobs for 8,000 workers and contribute VND4 trillion ($173.9 million) to the State budget. 

In 2016, HPG’s revenue reached VND34 trillion ($1.4 billion). Its profit after tax reached VND6.6 trillion ($290.4 million), up 34 per cent and 89 per cent respectively compared to the same period in 2015. In 2016 HPG recorded its highest revenue and profits since it had been established.

In October 2016, Hoa Phat was seeking permission from the Quang Ngai Provincial People’s Committee to take over the Guang Lian Dung Quat steel mill project in the central province.

With a large land area and repayments to the previous investor of around $12 million, it has been difficult to find a new investor capable of taking over and continuing the project. Without a new investor the province would be unable to reimburse the Guang Lian Steel Company, according to the management board.

Due to the large scale of the project local authorities have proposed offering incentives, including a tax rate of 10 per cent for 30 years in order to increase the competitiveness of the investor. Land tax exemptions for a maximum of 18 years have also been proposed.

The Hoa Phat Group would have to repay site clearance costs of more than $9 million to local authorities, which would then be deducted from rent.

In the real estate sector, apart from Pho Noi A Industrial Park in the Hung Yen province and Hoa Mac Industrial Park (IP) in Ha Nam province, Hoa Phat is going to construct two big projects in 2017. The two projects will be Yen My IP which covers 200 ha and Pho Noi New Urban Area covering 260 ha in Hung Yen province. 

For the agricultural sector, Hoa Phat said its array of animal feed production has already been put into operation and has been preparing to complete its second factory in Long Khanh IZ in Dong Nai province. It will have a capacity of 300,000 tons per year.

Hoa Phat this year continues to implement construction of its third plant, with a similar capacity, in Phu Tho province to serve the northwestern region.

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