Taiwanese E-United Group is unable to provide capital for Guang Lian steel project in the central province of Quang Ngai, putting it on the verge of bankruptcy, according to a source from the Ministry of Planning and Investment.
|Guang Lian steel project treats water in Quang Ngai province (Photo: SGGP)|
The group received the project’s investment certificate in 2006. At first, it was invested by Chinese Tycoons Group. Afterwards, E-United Group attended in with the capital contribution ratio of 90 percent.
The investment certificate had been amended four times. The first was in 2010 when the investors applied for increasing capital from US$3 billion to US$4.5 billion.
While the adjusted certificate had yet to be granted, E-United and JFE steelmaker headquartered in Japan signed a cooperation agreement to carry out the project early 2012. However the Japanese group withdrew two years later.
In March 2015, E-United proposed to amend the investment certificate for the fifth time, reducing capital from US$3 billion to US$2 billion and dividing construction into four phases…. In the end, the project is unlikely to escape from a bankruptcy.
Guang Lian is the third billion dollar steel project on the brink of ruin in the central region. The two former are US$9.8 billion Ca Na steel complex in Ninh Thuan province and US$1 billion Kobelco project in Nghe An.
Experts said that steel industry planning should be comprehensively reconsidered.