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Ministry hardens its attitude on cement

Update: February, 16/2012 - 10:53

HA NOI — The Ministry of Construction will temporarily delay work on several approved cement projects, said director of the ministry's Construction Materials Department Le Van Toi.

Projects must follow the cement industry development strategy for 2011-20, ratified by Prime Minister last year, and must also be agreed upon by the ministry's managerial body. Toi said the ministry had recently sent directives to the People's committees of cities and provinces nationwide to prevent the authorities from licensing new cement production projects.

The move was made because the ministry estimated there would be a large volume of cement in inventory. According to the Viet Nam Cement Association (VCA), the country's total cement output this year will reach 60 million tonnes, roughly 10 million tonnes higher than domestic demand.

The country has seen overzealous and uncontrolled investment in the cement industry for the past several years. The construction ministry reported there were currently 60 cement production plants nationwide.

Toi also noted that many cement producers were facing losses due to decreasing consumption and high interest rates.

"Many cement producers have had to borrow up to 80 per cent of their total investment capital and that eats most of their profits when interest rates remain high," Toi said.

Toi said the Thanh Liem Cement Plant in northern Ha Nam Province had to close its doors due to significant losses, though the plant has not yet declared bankruptcy. Many other plants have sharply cut their capacity from nearly 4 million tonnes to 2 million tonnes.

"If the situation continues, the number of cement plants that will have to shut down will surge in the near future," Toi said.

VCA's chairman Nguyen Van Thien urged cement producers to boost their trade promotion and export heavily this year to deal with the surplus. He expected that the producers could ship more than 7 million tonnes of cement this year, up 1.5 million tonnes from last year. Vietnamese cement is now exported mainly to China, Indonesia and Bangladesh, as well as several African and Southeast Asian countries. — VNS

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