Ninh Binh fertiliser plant faces closure

Monday, Jun 06, 2016 10:36

The Ninh Binh nitrogenous fertiliser plant could soon shut down due to its huge losses, according to the Viet Nam Chemical Group (Vinachem).— VNA/VNS Photo

HA NOI (Biz Hub) — The Ninh Binh nitrogenous fertiliser plant could soon shut down due to its huge losses, according to the Viet Nam Chemical Group (Vinachem).

In June 1, Chu Van Tuan, Vinachem deputy general director, said the group could stop operations of the Ninh Binh nitrogenous fertiliser plant because disadvantageous weather conditions have affected agricultural production which led to lower demand for fertilisers, including nitrogenous fertilisers.

In addition, farmers in the north mainly use phosphate fertilisers so nitrogenous fertiliser consumption has faced numerous difficulties, he said. In 2015, two Ninh Binh and Bac Giang nitrogenous fertiliser plants had an inventory of 180,000 tonnes and 70,000 tonnes of fertiliser, respectively, reported tienphong.vn.

To deal with that situation, Vinachem directed the two plants to restructure production and business to suit the demand of the local market and production ability in them, so that the two plants could each have an inventory of 20,000 tonnes to 30,000 tonnes of fertiliser, Tuan said.

The plant's construction was kicked off in May 2008 in Ninh Binh's Khanh Phu industrial zone and came into operation in 2012, 42 months after construction began.

In the nearly four years since then, the plant has been continuously operating at a deficit, accumulating altogether over VND2 trillion (US$89.9 million) in losses. Notably, in 2012, the company's losses amounted to VND75 billion ($3.37 million), which increased to VND759 billion ($34.12 million) in 2013, VND500 billion ($22.48 million) in 2014, and VND370 billion ($16.63 million) in 2015.

Vu Van Nhan, general director of Ninh Binh nitrogenous fertiliser plant, said the plant was forced to call a temporary halt to its operations in late March, but Vinachem decided against opening the plant's gates again. The company temporarily laid off 400 of its 1,100 workers, paying the monthly unemployment allowance of VND3.1 million to each worker.

By May 25, the plant had 19,200 tonnes of fertiliser in stock, he said. In June 1, the management met workers to discuss resumption of operations. The plant was expected to resume operations a week later.

However, Nhan said after restarting, the plant still faced many difficulties, including lack of workers, as some of them had moved to other businesses, and higher accumulated losses. According to the plant's report, its accumulated losses reached VND1.99 trillion in 2015.

The plant suffered huge losses because nitrogenous fertiliser price dropped on the world market when faced with a situation of excess supply, Tuan said. Also, since the plant was a new business it did not have experience in marketing activities and sold fertilisers at prices lower than those of Chinese fertiliser products. That selling price was lower than the production cost.

Thereafter, Vinachem proposed 11 plans for the plant to the government and the Ministry of Industry and Trade, including one of closure. If the Ninh Binh fertiliser plant closes, it would have to spend VND1 trillion per year towards repaying its debts. – VNS

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