Existing cement joint ventures are seeking permission to expand their workshops, while more and more cement projects are waiting to be licenced these days. Meanwhile, experts have warned that Vietnam may face cement overproduction in 2009.
 
How much is enough?
 
More and more investors inject money in cement plants despite the forecast about overproduction
Statistics show that operational cement plants can produce 33-34mil tonnes a year. Meanwhile, a lot of cement joint ventures have got permission from the Government to expand their scope of business, including Holcim, Phu Son, Nghi Son, Chinfon, and Luckvaxi. Most recently, the construction of the Dong Thanh cement project was kicked off in Nhon Trach Industrial Zone (IZ) in Dong Nai province. It will have the capacity of 1mil tonnes a year once operational. Prior to that, also in Nhon Trach IZ, French Lafarge announced it would market Lavilla brand name cement, which would be produced in a quantity of 500,000 tonnes a year.
 
 In Hiep Phuoc – Nha Be IZ alone, six cement projects are running: Cotec, Thang Long, Nghi Son, Chinfon, Phuong Nam and Ha Long. Two other projects, the Tay Ninh plant with the designed capacity of 1.5mil/tonnes a year, and the Binh Phuoc cement plant, which has the total investment capital of $308mil, will also tee off in some days. Moreover, there are a series of clinker grinding workshops which have the total capacity of 4mil tonnes a year.
 
Despite the high capacity of the existing cement plants, cement shortages still occur in some localities, especially southern provinces. The shortage cannot be settled by transporting cement from the north to the south, since it is very costly to do that. That explains why investors still plan to set up cement workshops in the south.
 
 Cement should not be seen as key export item
 
Strategists have estimated that it will take some $4.2bil to develop the cement industry by 2010. However, it is foreseeable that Vietnam will see overproduction in several years.
 
 Chairman of the Vietnam Cement Association Nguyen Van Thien said that domestic production now could meet the domestic demand. By 2010, total output will exceed demand.
 
 The Ministry of Construction has asked the Government to limit the licencing of new cement projects. Vietnam should not make heavy investment in cement production as a key export item, since cement production results in environmental devastation.
 
 In fact, the operational cement projects in northern provinces, including Ha Nam, Ninh Binh, Thanh Hoa and Quang Ninh have exhausted limestone mines in the localities.
 
According to the Vietnam Cement Association, by 2010, the Red River Delta will see the surplus of 5mil tonnes of cement, while the figures for the northern provinces of the central region will be 8mil tonnes, and the northeastern provinces, 5mil tonnes.
 
When asked if Vietnam could export cement, a representative of a cement joint venture said that it would depend on the quality and prices, and Vietnam-made cement seems to be uncompetitive in the international market.
The price of Vietnam-made cement remains relatively high in the region. The biggest rivals in cement production come from China, which can provide cement at surprisingly low prices. Analysts said that some 3-4,000 tonnes of cement are overflowing into Vietnam every month, which should be seen as a threat to Vietnam’s cement industry.