The Ninh Binh Nitrogenous Fertiliser Plant could soon shut down due to its huge losses. — Photo ninhbinhurea.vn

HA NOI (Biz Hub) — The Ministry of Industry and Trade (MoIT) will, in June, inspect the Viet Nam Chemical Group (Vinachem) and Ninh Binh Fertiliser Plant, a member company of Vinachem.

Minister of Industry and Trade Tran Tuan Anh made this announcement at the ministry's online meeting on Monday in Ha Noi.

The Ninh Binh Nitrogenous Fertiliser Plant has faced numerous difficulties in technology with regard to production of nitrogenous fertiliser from coal and consumption of fertilisers, according to the ministry.

Therefore, the minister asked the ministry's Chemical Department and Vinachem to review the efficiency of the Ninh Binh and Ha Bac nitrogenous fertiliser plants to understand the production and business of nitrogenous fertiliser and chemical plants nationwide with an eye on the future, vietnamplus.vn reported.

Tuan Anh said the Ninh Binh fertiliser plant has completed the planned investment but until now has not made a final settlement of its investment capital. That has affected the production and business plans of Vinachem. So, the ministry's inspectors together with the department should conduct an early inspection of the Ninh Binh nitrogenous plant.

Thereafter, the ministry will conduct an orientation on the development of the Ninh Binh fertiliser plant as well as other nitrogenous fertiliser plants in future based on the findings of the inspection at the plant and Vinachem.

For stability on the local market, Tuan Anh said the department and Vinachem must work with the Market Watch Department in its fight against smuggling and trade fraud for fertiliser and chemical products.

The Chemical Department should also work with the Science and Technology Department to promote building of standards on inspections and granting of investment licences for fertiliser projects, he said.

Ninh Binh plant

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 had to sell 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