Vietnam: MOC reconsiders cement industry development plan

Vietnam: MOC reconsiders cement industry development plan
Published: 13 August 2010

The Ministry of Construction (MOC) is drawing up a plan to re-develop the cement industry by 2015-2025, after warnings about the industry overheating and overproducing cement.

It is expected that the draft of the cement industry development plan will be completed and submitted to the Government for approval by the end of this year. This is the fourth time within twelve years Vietnam has had to adjust the cement industry development plan.

Nguyen Tran Nam, Deputy Minister of MOC, has emphasized the need to reconsider the cement industry development strategy. The new strategy needs to clearly stipulate the progress of key projects that will begin construction every year, so that production comes in line with supply and demand. It is also necessary to restrict areas for cement project development. Many areas initially reserved for developing cement projects will be excluded from the list, in order to protect famous landmarks in those locations.

Though MOC has warned about the possibility of cement overproduction, more new cement projects have been licensed and more cement factories have become operational. By the end of June 2010, 108 cement production lines have been put into operation, with the capacity to produce 65Mt of cement each year. This represents a two-fold increase within just four years.

Along the Highway No 1, on the stretch of road from Phu Ly (Ha Nam) to Vinh City (Nghe An province) alone, there are eleven cement factories with the capacity to produce 23 million tons of cement per year. The fact that investors have flocked to set up cement factories along the Highway No 1 shows the imbalance in cement investments. Cement was once abundant in the north and deficient in the south.

In the first days of July 2010 alone, two cement projects in Thua Thien-Hue and Quang Nam provinces were kicked off. The noteworthy thing is that just several months before, MOC sent a dispatch to local authorities requesting that local authorities not grant investment licenses to any more cement projects until 2020.

The cement supply is forecast to exceed demand by three million tons by the end of 2010, and the oversupply will be even higher in the next few years, when dozens of new production lines become operational. Experts have warned that there will be an excess of seven million tons of cement by 2011, with the figure increasing to 15Mt by 2012.

With the anticipated cement overproduction, MOC has requested some enterprises boost exports in the last months of the year.