Steel products being loaded at Thai Nguyen Iron and Steel Co for shipping.The steel industry was struggling to get loans for projects due to investor caution. — VNA/VNS Photo Trong Dat

HA NOI (Biz Hub) — The steel industry was struggling to get loans for projects to build new factories and upgrade existing facilities due to investor caution, said an official from the Viet Nam Steel Association (VSA).

VSA Chairman Pham Chi Cuong said interest rates had fallen but steel enterprises were still having difficulty in accessing capital. Banks have agreed to grant loans but the projects must meet specific conditions to be eligible for credit.

Steel projects needed huge investment and it took time to recoup initial capital and turn a profit. Investments were also risky if the owner of the project did not choose quality equipment and technology, Cuong said.

He said the project to expand production for the second stage of the Thai Nguyen Steel Joint Stock Company was approved in 2007 with initial capital of VND3.8 trillion (US$180.95 million), and the expansion was due for completing in 2011.

However, many difficulties developed during the implementation process, forcing the cost up to VND8.1 trillion ($385.7 million).

The PM had approved in principle a plan to arrange capital for the project and the Ministry of Industry and Trade had asked the company to work with banks to access loans, but the problem remained unsolved, Cuong said.

The Viet Nam Steel Corporation has also been unable to find an investor to develop its hot-rolled steel project with a capacity of 2 million tonnes, despite negotiations with potential partners from Russia and Malaysia.

He said the banks should list specific conditions for enterprises to get loans for production. — VNS