There is still a lot of work to be done.

(Baonghean)Abundant natural resources are only one of the important conditions for developing the cement manufacturing industry. Along with that, many other related issues exist, such as: mechanisms and policies to attract investment; attracting capable and dedicated investors; technical infrastructure; planning and development orientation; and opportune moments… Because it has not yet fully met these factors, Nghe An is facing difficulties in achieving its goal of becoming a major cement production center of the country.

The "Gray Shades"

Nghe An's cement industry is considered to have a long tradition. With the early establishment of the Cau Duoc Cement Plant and the 12/9 Anh Son Cement Plant, this should have been a solid foundation for the province's strong development of the cement industry, but the reality is different.

Theoretically, if we add up the total capacity of all existing cement plants in the province, we get 1.648 million tons/year (including: Hoang Mai Cement 1.4 million tons; Cau Duoc Cement 0.072 million tons; Petrochemical 12/9 Cement 0.088 million tons and Hop Son Cement 0.088 million tons). However, in reality, except for Hoang Mai Cement (which started production in 2002) with rotary kiln technology, which has stable production and business, most of the other cement plants are experiencing a decline.

The Cau Duoc Cement Plant, with its outdated vertical kiln production line, produces low-quality, unsaleable products. Furthermore, its operation causes environmental pollution. The plant's main product is not cement; it primarily buys clinker as raw material and grinds it, resulting in very low production volumes. Currently, the plant is shifting its focus to producing various construction materials. Similarly, the 12/9 Oil and Gas Cement and Hop Son - Anh Son Cement Plants, also using outdated rotary kiln technology, are currently operating at a reduced capacity, awaiting investment in new projects. Outdated cement technology, low production capacity, and products struggling to compete in the market are the "gray areas" facing cement manufacturing businesses in Nghe An province.

Rotary kiln cement production technology has become outdated at Cau Duoc Cement Joint Stock Company.

Limestone and clay are the main raw materials for the cement industry. Many localities in the province, such as Quynh Luu, Hoang Mai, Nghia Dan, Do Luong, Anh Son, and Con Cuong, have abundant resources. However, due to outdated cement plant technology, low capacity, and inconsistent quarrying processes, the value of limestone-based products has not been fully realized. Furthermore, quarrying wastes resources, causes significant environmental and ecological damage. According to surveys and explorations by relevant agencies, the province has reserves of over 4 billion cubic meters of limestone, over 1 billion tons of clay, and hundreds of millions of tons of additives such as basalt, kaolin, and iron ore. In addition, there are approximately 4-5 million tons of coal (in Tuong Duong and Con Cuong), a type of long-fired coal with high calorific value, suitable for cement firing. With such large reserves, any investor in the cement industry would be attracted and want to get involved. Thus, the resource advantage of the cement industry in our province is enormous, but it has not been effectively exploited; in fact, this resource is being exploited to serve cement production projects in other provinces.

For generations, the Len, Kim Giao, Rang Cua, and Da Bac mountain ranges, composed of limestone and clay, held no economic significance or value for the people of Tan Thang commune and the surrounding areas of Quynh Luu district. However, recent surveys indicate that this area contains approximately 241 million tons of limestone and 36 million tons of high-quality clay, making it ideal for cement production. With these results, the local people have reason to hope that in the future, cement projects will be invested in the commune, providing them with jobs and income, and gradually transforming the rural landscape. Similar to Tan Thang, the people of Len Roi - Tan Ky area are very happy to learn that, after exploration and surveying, the limestone resources here have a total reserve of over 2,782 million tons, of good quality, and the Saigon Investment Group has decided to invest in implementing a project to build a large-scale cement and building materials production complex in Tan Ky.

However, to date, this valuable resource remains… a resource, because the project investor has “withdrawn.” The local people are facing environmental pollution and indiscriminate exploitation of the resource. Many unlicensed quarrying operations have sprung up. The mining process does not meet the requirements and regulations of the State, creating a constant danger that threatens the lives of workers due to the risk of mine collapse (not long ago, a quarry collapse occurred in Len Roi. Authorities arrested those involved for failing to comply with the law)…

As mentioned above, limestone and clay resources in our province are abundant, but they have not been effectively managed and exploited to serve the cement industry. One of the reasons for this situation is the lack of proper planning. This has created difficulties for investors in obtaining information and implementing projects. After a period of project implementation, the Tan Thang cement project's investor has now had its plan adjusted and supplemented from a reserve mineral mine plan to a plan for exploration and exploitation of mineral reserves as raw materials for cement production until 2020.

The Hoang Mai 2 cement plant project is also facing concerns about raw material sources, and several other projects are encountering difficulties and obstacles in planning raw material mining areas. The lack of synchronized planning for raw material areas greatly affects investor confidence. In recent years, our province has continuously innovated investment promotion efforts, issuing mechanisms and policies to attract investment in a transparent manner, resulting in many investment projects in the cement production sector.

However, some projects initially launched with considerable fanfare but quickly faded into obscurity. A prime example is the Saigon Investment Group's project to build a large-scale cement and building materials industrial complex in Tan Ky. The project, which began with a long-term investment, commenced construction of the Saigon - Tan Ky cement plant (May 19, 2010) with a designed capacity of nearly 1 million tons of cement per year in phase 1 (total investment of approximately 1,500 billion VND). Phase 2 would expand the capacity to 10,000 tons of clinker per day, with two production lines, equivalent to 4 million tons of cement per year.

Following the groundbreaking ceremony for the factory, which brought much hope to the people of Tan Ky and the provincial authorities, the project was met with high expectations. However, the wait dragged on for quite a long time, and ultimately, the province had to withdraw the investment license. Mr. Hong Truong, former General Director of the Saigon - Tan Ky Cement Plant project, once shared: “Due to difficulties in securing capital, if we continued investing, we would have to borrow from banks at commercial interest rates, and even then, it would be very difficult to obtain loans. The cement industry requires a long time, so investing with commercial interest rate loans would not be feasible.” There are many reasons for this failure, but it is clear that the investor lacked resources and chose an inappropriate investment phase (timing). Despite spending considerable funds on investment preparation, groundbreaking, land compensation, construction of auxiliary facilities, social activities, and charity work, the investor had to abandon the project.

For example, at the Hop Son cement project (formerly the 19/5 Anh Son Cement Plant), due to the investor's insufficient financial capacity to continue the project and the project's progress being delayed for years, the province revoked the investment certificate. It can be seen that from 2010 to the end of 2012, the cement market experienced complex developments, with many cement plants nationwide facing losses as production exceeded demand. Furthermore, this was exacerbated by Resolution 11-CP and the tightening of investment policies, along with the tightening and relatively high lending policies and interest rates of credit institutions. Because of these difficulties, several new cement investment projects, or joint ventures and partnerships, encountered difficulties in implementation in our province, such as Cau Duoc Cement, Do Luong Cement, and 12/9 Oil and Gas Cement…

The signs are gradually warming up...

Since the beginning of 2013, the cement and building materials market has shown signs of warming up. Cement consumption is currently growing at 10-15%, and is projected to continue increasing at 5-10% per year in the coming period. This positive outlook for the cement industry is due to the government's implementation of various stimulus policies, measures to alleviate difficulties for businesses, banks reducing lending interest rates, and the commencement of new construction investment projects. Furthermore, demand for household consumption is also trending upwards. This can be seen as a new opportunity for launching investment projects in the cement manufacturing sector.

Anticipating this trend, Tan Thang Cement, after a long period of "slow" investment, decided to accelerate progress in early August by organizing a contract signing ceremony and implementing the EP package for equipment supply with a total value of over 93.3 million USD. The equipment suppliers are world-renowned brands in cement production technology. According to the plan, after completing phase 1 of the project in 2016, Tan Thang Cement Plant will supply the cement market with 2 million tons of high-quality products annually. Mr. Nguyen Cao Dien, General Director of Tan Thang Cement Joint Stock Company, stated: “Identifying the market trends for cement consumption in Vietnam and the region, which demand high quality, reasonable prices, and sufficient capacity to fulfill contracts for large projects, the company has decided to invest in the most modern and advanced cement production technology currently available in the world, which is environmentally friendly, produces high-quality products, and creates a competitive advantage in the market.”

Currently, in Nghe An province, the Hoang Mai Cement Plant supplies over 1.4 million tons of cement annually, while other cement plants produce between 300,000 and 400,000 tons. However, according to surveys and statistics from relevant authorities, Nghe An province consumed 2.7 million tons of cement in 2011. Thus, there is still significant potential for cement plant projects within the province. Forecasts indicate that by 2015, cement consumption in the province will fluctuate between 3.3 and 4.95 million tons, and by 2020, it will reach approximately 7.2 to 8.8 million tons. This is significant and provides impetus for some investors to boldly enter the cement production sector.

The 12/9 Petroleum Cement Joint Stock Company in Anh Son district seized this opportunity and has been working diligently to complete a project with a capacity of 550,000 tons per year, using modern rotary kiln technology according to European standards. The project has a total investment of over 1.1 trillion VND and has completed several major components, including cement silos, heat exchange towers, bagging facilities, general warehouses, cement grinding plants, and kiln bases. The company is determined to complete the project in the fourth quarter of 2003 and begin producing its first tons of product in early 2014. Thanks to the abundant limestone raw material area (the planned mining area of ​​the 12/9 cement company) with reserves of 49.5 million tons, the plant has favorable conditions for long-term operation.

Another cement project currently underway is the Do Luong Cement Plant. After years of struggle and changes in ownership by multiple investors, it has remained difficult to secure a permanent location. Currently, The Vissai Cement Group – Ninh Binh has agreed to take over the project and install advanced equipment and technology to achieve a capacity of 2 million tons per year (the project's original design was for over 900,000 tons per year). Given the investor's strong commitment, the Provincial People's Committee has submitted a document to relevant authorities for consideration and resolution. Clearly, accelerating investment in several cement projects is a suitable approach given the current situation.

Cement products of Vicem Hoang Joint Stock Company.

Seize the opportunity...

In the coming period, it is likely that only 7 out of 46 cement projects (in the planning stage) nationwide will be completed and put into production (many cement projects have not been implemented due to a lack of investment capital). Therefore, from 2015 onwards, a shortage is predicted in the cement product segment, especially high-quality cement. According to economic experts, the current period is favorable for cement projects (already approved by the Government) to accelerate their completion.

According to the Vietnam Cement Industry Development Plan for the period 2011-2020 and orientation to 2030, as stipulated in Decision No. 1488/QD-TTg dated August 29, 2011, of the Prime Minister, Nghe An is one of four regions with significant potential for cement industry development nationwide, including: the Red River Delta region (Quang Ninh, Hai Phong, Hai Duong, former Ha Tay); Ninh Binh; Ha Nam; and the North Central region (Thanh Hoa, Nghe An, Quang Binh). Therefore, the goal of developing Nghe An into a major cement production center is appropriate; the remaining issue is how the province will organize its implementation.

To stimulate the development of the cement industry, in the coming period, along with continuing to improve the investment environment, reviewing, supplementing, and building preferential mechanisms and policies to support and encourage investment capital for cement production, and promoting the effectiveness of the "one-stop shop" and "integrated one-stop shop" mechanisms to quickly resolve investors' requests during project implementation, the issue of planning and granting raw material mine licenses needs timely attention. Currently, the procedures for granting mine licenses are quite complex, involving approval from many levels of government agencies. A comprehensive approach is needed: after evaluating and selecting suitable investors, the relevant provincial authorities should be responsible for supporting and creating favorable conditions for them.

In addition, the province needs to provide decisive direction to further improve the labor market information system, especially in training a skilled and high-quality workforce for cement manufacturing enterprises. Focus state budget support on building off-site infrastructure for projects. Apply financial and credit support policies and strengthen local capital mobilization from state-owned banks and credit institutions, shifting lending methods to project-based lending, directing capital flows into priority areas such as cement production and consumption...

To become a major cement production center of the country, Nghe An cannot rely solely on its abundant resources; much work remains to be done. However, with the attention and support of all levels and sectors, the strong innovation in the province's management and direction, the dedication and efforts of investors, and the agreement and support of the people, we will certainly achieve the goal of "becoming a major cement production center of the country."

Text and photos: Hoang Vinh