[Vnbiz] Eminence / $30bil steel project in Thanh Hoa?

Sun May 20 08:53:20 PDT 2007

Hi,

Seems a bit extraordinary.  30 Billion.  Also there is serious overcapacity
in steel nowadays and prices have slumped.  I did a search and found little
but one group who trades in underwear.  The numbers being tossed around were
140 Million, nowhere near the billions.  Plus the article reads a little
vague.  Banks are interested, but nothing on paper.  They want to be kept
informed.  Sounds like a roll of the dice.  What do the IFC and ADB have to
say on this, have you tried contacting them.  I'd be surprised if anyone
wants to throw 30 billion more at steel, and for export, really surprised.
Especially with the  overcapacity, and likely bad investments, that will
roll out of China after internal demand slumps in the run-up to the Olympics
and certainly thereafter.

Hmmm...... Interesting.

Craig

On 5/20/07, Pham Hoang Duong <duongphh at yahoo.co.uk> wrote:
>
> [ Vietnam Business Forum ]
>
>
> Dear CACC,
>
> Do anybody know about Eminence Group (below news) please? I check the
> internet sources like hoovers.com but cannot find any info about this
> company? Do you think this group is a real joker?
>
> ********************
> http://english.vietnamnet.vn/biz/2007/05/695607/
> $30bil steel project in Thanh Hoa?16:34' 16/05/2007 (GMT+7)
>
> *VietNamNet Bridge – The US-based Eminence Group has announced it will
> make investment in a big project in Nghi Son Economic Zone in the central
> province of Thanh Hoa, which has the surprisingly high estimated capital of
> $30bil.*
>
>   [image: steel.jpg]<http://english.vietnamnet.vn/dataimages/200705/original/images1312045_steel.jpg> Thanh
> Hoa province's mapThe project will consist of a big steel complex and
> supporting works including a deep water port, thermo power plant, shipyard,
> cement plant, and urban area. It will also have kindergartens and a
> university, research institute, general hospital, five-star hotel and 400
> steel downstream factories.
>
> Presenting the project on May 15 in Hanoi, Yang Wu Sung, Chairman of
> Eminence, said that Vietnam had become very attractive in the eyes of
> investors around the world. He said that Eminence was ready for the project
> in Thanh Hoa, capitalised at $30bil.
>
> The project on the steel mill in the first period is expected to have the
> investment capital of $10bil (July 2007-2013 <javascript:void(0)>), and
> will have the capacity of 12mil tonnes a year in the initial time of
> operation, and then 30mil tonnes a year.
>
> The capital for the giant project will be sourced from financial
> institutions, commercial banks in the world, from Eminence group itself and
> from the land use right value provided by Thanh Hoa provincial authorities.
>
> The steel mill and other factories will use high technologies from Europe
> and Japan. Iron ore and coke coal will be imported. Eminence now has 12 iron
> mines with the total reserve of 1.22bil tonnes in Indonesia, China,
> Australia, Brazil, coke coal mines with the reserve of 200mil tonnes in
> China and some other countries. Vietnam-sourced coal will be used to run the
> thermo power plant.
>
> The steel mill will churn out high-quality products, including ingot
> steel, specialised steel, bar steel used in industries, hot and cold rolled
> steel, galvanised steel. Only a small part of the products will be consumed
> domestically, while most of them will be for export. The mill will not make
> rolled steel to compete with domestic steel mills.
>
> Eminence plans to build in Nghi Son EZ a modern steel mill which can put
> out competitive products, meet Euro 3 standards on exhaust fumes.
>
> Representatives from big institutions in the world attended yesterday's
> presentation, including ADB, Deutsche Bank in London, TFG international
> consultant, Hyder Consulting Ltd, Dragon Capital investment fund management
> company, Davis Landon Seah financial group.
>
> Mr Philipe from TFG, the official consultant to the project, said that
> there were four things Eminence requires from TFG 1. nominating and
> selecting consultants to the project 2. uniting financial institutions to
> arrange capital for the project 3. raising funds among international banking
> community and 4. negotiating with equipment providers.
>
> He said that TFG had completed the negotiation with ADB and IFC, the arm
> of the World Bank. The two organisations prove to be very interested in the
> project and want updated information regularly.
>
> He said that many big commercial banks in the world have expressed their
> interest in the project, but none of them had made an official statement
> about funding the project.
>
> Hyder Consulting Ltd will take responsibility for the technical issues of
> the project, while David Landon Seah will be in charge of financial
> consultancy. The two companies will get set to build the feasibility study
> for the project, which is expected to be completed at the end of 2007,
> before the project is officially kicked off in early 2008.
>
> Eminence said that the demand for steel is very high in the world. Now in
> Asia, Eminence has 30 big clients, which consume 4mil tonnes of different
> types every year. Meanwhile, the consumption level reaches 24mil tones,
> including 17mil flat steel and 7mil round steel products.
>
> The still mill to be built in Thanh Hoa is expected to churn out 3mil
> tones of hot rolled steel a year by 2009, of which, 1mil tones will serve
> domestic demand, 1.2mil for export, and the other 0.8mil tones for making
> cold rolled steel.
>
> According to Eminence, the iron ore it explores is $50/tonne cheaper than
> the market price, while the coke coal it produces is $40/tonne cheaper.
>
> However, the information provided by Eminence at the presentation seemed
> to not satisfy the audience. Eminence did not provide enough information
> about itself (fields of operation, experience, legal capital, names of
> projects they have run). The Chairman of Eminence has refused an interview
> proposed by VietNamNet, reasoning that he was busy with other jobs.
>
> Nguyen Van Loi, Chairman of the Thanh Hoa People's Committee, said that
> Eminence had asked Thanh Hoa authorities to make capital contribution equal
> to 10% of the total project value. The capital will include the land use
> right, while Eminence will borrow money for Thanh Hoa authorities from the
> world's financial institutions.
>
> However, Mr Loi stressed that the Government would decide whether Thanh
> Hoa authorities will make capital contribution.
>
> The project has been submitted to the Government and relevant ministries
> for consideration.
>
> The Nghi Son EZ, which has the surface area of 18,000 ha, is considered
> the best place for making investment in the north thanks to deep water port
> and favourable transport.
> ******************
>
> Pham Hoang Duong
>
> Maersk Broker Singapore
>
>
>
>
>
>
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