Quyết định 694/QD-BCT

DECISION

APPROVAL OF STEEL MANUFACTURING AND DISTRIBUTION SYSTEM DEVELOPMENT PLANNING BY 2020 WITH A VISION TO 2025

MINISTER OF INDUSTRY AND TRADE

Pursuant to Decree No. 95/2012/ND-CP dated November 12, 2012 of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to Decree No. 92/2006/ND-CP dated September 7, 2006 of the Government on the formulation, approval and management of master plan of social - economic development and Decree 04/2008/ND-01 dated 11 January 2008 of the Government amending and supplementing a number of articles of Decree No. 92/2006/ND-CP dated September 7, 2006;

Based on the evaluation results of the report on strategic environmental assessment of steel manufacturing and distribution system development planning by 2020 with a vision to 2025 of the Industrial Safety and Environment Agency in document No. 996/ATMT-TDMT dated November 14, 2012;

Based on document No. 3539/VPCP-KTN dated May 21, 2012 of the Government Office informing opinion of the Deputy Prime Minister Hoang Trung Hai to authorize the Minister of Trade and Industry for approving the steel manufacturing and distribution system development planning by 2020 with a vision to 2025.

At the proposal of the Director of Heavy Industry Department,

DECIDES:

Article 1. Approving the steel manufacturing and distribution system development planning by 2020 with a vision to 2025 with the following essential contents:

1. Development viewpoint

a. Developing the steel manufacturing and distribution system in line with the master plan of social - economic development, sector of trade and industry and the roadmap of international economic integration of Vietnam.

b. Building and developing the steel manufacturing and distribution system towards modernization ensuring stable and sustainable growth; gradually reducing imbalance between long steel products and flat steel products, between manufacturing and distribution circulation.

c. Building the steel manufacturing system with advanced technology, thriftily and efficiently using natural resources and energy of the country, protecting the ecological environment at the steel business and manufacturing areas. Gradually removing small manufacturing facilities with technologies which are outdated, material and energy consuming and cause environmental pollution.

d. Encouraging all economic sectors, domestic and foreign enterprises to invest in investment in manufacturing of pig iron, steel billets, finished steel, manufacturing of equipment for steel lamination and refinement up to international standards. Having incentives for manufacturing investment projects of pig iron, alloy steel and steel of high quality from iron ore on a large scale. Limiting the investment and manufacturing of domestic products that have met consumption demand.

e. Developing distribution system reasonably and in accordance with the laws of the market economy, ensuring the autonomy and freedom of business and fair competition among entities with the macro regulation of the State.

2. Development objectives

a. Objectives

Developing Vietnamese steel industry to meet demand of steel products for national economy and ensure stability for domestic consumption market and export. Developing the steel industry which is sustainable and environmentally-friendly.

b. Target.

* For manufacturing system

- Manufacturing pig iron and sponge iron: Meeting sufficient cast iron for mechanic manufacturing and most of the raw materials for steel billet manufacturing in the country.

Manufacturing shall reach 6 million tones approximately by 2015; 17 million tonnes approximately and 28 million tonnes of pig iron and sponge iron approximately by 2020.

- Manufacturing of steel billet (from pig iron, sponge iron and scrape steel): 12 million tonnes approximately by 2015, 25 million tonnes approximately and 40 million tonnes approximately by 2020

- Manufacturing of finished steel: 13 million tonnes approximately by 2015; 23 million tonnes approximately by 2020, and 39 million tonnes approximately by 2025. Proportionately developing between long steel products and flat steel products.

- Gradually increasing the rate of export of steel products of various types. The rate of export is 15% approximately by 2015; 20% approximately by 2020 and 25% approximately by 2025 compared with the output.

- Gradually decreasing the rate of import of steel products of various types. The rate of import is 35% approximately by 2015; 25% approximately by 2020 and 15% approximately by 2025 compared with domestic consumption demand.

* For distribution system

- Gradually developing the steel distribution system modernly, scientifically, transparently and efficiently.

- By 2015, initially forming a modern steel distribution system (building 01 Exchange of steel products in Hanoi or Ho Chi Minh City). Forming steel distribution centers in regions. Transactions made through the Exchange and steel distribution centers shall reach around 7-10% of steel output consumed in the market.

- By 2020, completing Exchange and steel distribution centers in regions. Transactions made through the Exchange and steel distribution centers shall reach around 10-15% of steel output consumed in the market.

- By 2025, tTransactions made through the Exchange and steel distribution centers shall reach around 15-20%, meeting customers’ demand on types and quality of products with competitive price.

3. Development orientation

a. Orientation of manufacturing system development

- Manufacturing of pig iron, sponge iron, steel billet and finished steel.

Investing in plants manufacturing pig iron, sponge iron from iron ore in the country or imported for supply of raw materials for steel refining plants while manufacturing products from cast steel. Completing targets of output of pig iron, sponge iron, steel billet and finished steel.

Developing domestic steel manufacturing towards product diversification such as building steel, cold rolled steel, hot rolled steel sheet, galvanized steel. Especially encouraging investment in manufacturing high quality steel, alloy steel for mechanical engineering, shipbuilding industry to replace imports.

- Types of product

Prioritizing investment in manufacturing pig iron, steel billet from iron ore, some types of hot rolled steel sheet products, alloy steel, stainless steel etc. ..

- Technology and equipment

Investing in advanced, energy-consuming, high productivity and environmentally-friendly techonology.

- Focusing on investment in steel manufacturing projects in the Central coastal region, followed by the Southeast region and the Red River Delta. Also, investing in some steel rolling and refining plants in several provinces in the northern mountainous areas (localities with sufficient iron ore).

b. Orientation of distribution system development

- Building and developing the steel distribution system in the form of vertical and horizontal alignment, consistent with the characteristics of goods, consumption trends and market segments, linking the supply and consumption of products. Strengthening the linkage between manufacturers, distributors, service and regular customer; applying information technology, e-commerce transactions, namely:

+ Building and developing systems of distribution center and logistic services of steel industry in industrial zones, export processing zones and areas with large scale of urbanization to meet the demand for steel in the market;

+ Developing a modern business method such as Vietnam Commodity Exchange, auction, franchising and e-commerce center. Encouraging the development of a number of big and potential distributors which carry on general or specialized business and are competitive effectively;

+ Diversifying distribution methods. Forming and developing commodity markets in the future; improving the regulatory environment and information technology infrastructure, providing public services to support e-commerce activities; encouraging the use of the website to provide goods and services.

4. Development planning

a. Forecasting domestic demand for steel product consumption (including steel bar, roll, shape, hot rolled, cold rolled coil, steel pipe) by 2020, with a vision to 2025

b. Production planning and distribution by region

- Total capacity of the projects expected to manufacture pig iron and steel by 2020, in consideration of the year 2015 as follows:

Raising capacity of pig iron and steel plants (at least 70% of design capacity). Focusing on investment in development of a number of projects with large scale and capacity in the areas of iron ore raw materials and convenient transportation etc. .. to manufacture a number of key products such as pig iron and sponge iron, steel billets, hot rolled steel sheet, cold rolled steel coil and building steel. For areas with iron ore but difficult to transport and consume products expected to invest in manufacturing of cast iron, steel billet and fabrication steel. is expected to produce investment cast iron, steel billets, fabricated steel.

Based on the distribution of iron ore raw materials, geographic location, infrastructure, transportation, product consumption demand, etc. .. By 2020 there will be a number of major projects invested by foreign enterprises in combined plant manufacturing hot rolled steel sheet from iron ore in the central region (Ha Tinh, Quang Ngai) and at the same time, a number of domestic enterprises shall invest in manufacturing of steel billets, building steel in the northern mountainous regions (Lao Cai, Thai Nguyen).

Researching the investment in a number of projects manufacturing pig iron and steel from iron ore by blast furnace technology or non-coking technology with medium scale in Ha Giang, Cao Bang, Bac Kan, Yen Bai in order to exploit and use iron ore resource in the above areas to manufacture cast iron products, mechanical steel fabricating the out of gauge, super-heavy equipment, steel serving national defense industry etc. .. Forms of investment by 100% of domestic capital investment or joint ventured with foreign investors.

 (List of projects planned for investment in the period 2020, in consideration of the year 2025 of Vietnamese Steel Industry in Annex attached hereby)

- Distribution planning by regions

Distribution of steel manufacturing capacity 2020 by six regions

c. Distribution system planning by regions

Consolidating distribution system of steelmaking enterprises towards cross linkage with the distribution company, engaged in the regional distribution centers and steel Exchange. Restructuring trading system, expanding the sales network of companies in many different forms of linkage and ownership. Developing trading companies which coordinate and operate the steel circulation systems.

Planning and developing the new distribution system based on e-commerce coordinating with Exchange and regional distribution centers to create premises for market development in the future. The distribution system by regions is as follows:

* Red river region

- Investing and consolidating storage system, strengthening the development of information system, improving the capacity to provide steel processing services to meet the higher demand for regular consumption households. Reorganizing the steel distribution channels built in big cities such as Hanoi, Hai Phong, etc. ..

- Period 2011 – 2015, building from 4 to 6 steel distribution centers associated with big steel manufacturing facilities in Hai Phong and Hai Duong.

- Period 2016 – 2020 completing Exchange and centers built. Additionally investing from 2 to 3 distribution centers in other provinces in the region.

* Northern midland and mountainous region

- By 2015, building distribution centers associated with steel manufacturing facilities in the region, especially in Lao Cai, Thai Nguyen, Cao Bang, Phu Tho and Hoa Binh. The remaining provinces shall have agents, warehouse with small and medium size.

- Period 2016- 2020, it is expected to build steel distribution centers in other provinces in the region, expanding investment in existing centers.

* Central coastal region

- By 2015 building 6 distribution centers located on main streets in urban centers of Thanh Hoa, Nghe An, Ha Tinh, Da Nang, Quang Ngai and Khanh Hoa provinces in service of demand for building steel in the area.

- Period 2016- 2020 buidling steel distribution centers associated with large steel manufacturing facilities to take advantage of warehouse and open storage of manufacturers to supply steel to other provinces or for export.

* Central Highlands

- By 2015, investing in small and medium size logistic service facilities essentially serving the demand for building steel. It is estimated to build a medium size distribution center in Gia Lai or Dak Lak province.

- Period 2016- 2020 it is estimated to expand and upgrade the built center additionally invest from 1 to 2 regional distribution centers.

* Southeast region

- Period 2011- 2015 strengthening the existing distribution system, improving the capability of providing steel processing services. Reorganization building steel distribution channels in major cities. Building from 4 to 6 steel distribution centers in Ho Chi Minh City, Dong Nai, Binh Duong and Ba Ria - Vung Tau.

- Period 2016 - 2020 further consolidating and completing Exchange and steel distribution centers for regions to facilitate consumption through modern commercial forms.

* Mekong River Delta

- By 2015, building from 1 to 2 distribution centers in Kien Giang and Can Tho for supply to western provinces. By 2020, expanding these 2 centers and additionally building from 3 to 4 centers to meet rapidly increasing demand in the region.

- Period 2011 – 2015, building 1 steel Exchange in Ha Noi or Ho Chi Minh City.

5. System of solutions and planning implementation policies

a. Investment solutions

- Investment capital: Stabilizing policies to encourage to attract investment capital from all economic sectors for manufacturing development and distribution of steel. Using budget funding to invest in infrastructure outside the fence of large scale projects area and the distribution centers. Having incentive policies for combined steel plant projects. Prioritizing the investment in projects of manufacturing pig iron, steel billets, hot rolled steel sheet, alloy steel, steel of high quality, large shaped steel and stainless steel that have not met the demand or been manufactured currently.

- Investment management: Manufacturing steel not subject to conditioned investment sector. There should be consistency in the investment management of the steel industry in accordance with law.

- Surface area: Steelmaking projects should be located in industrial zone, economic zones which have been planned by localities. The regional distribution center should be arranged in commercial infrastructure planning and developed in urban areas and ensure adequate area and full compliance with the criteria of regional distribution centers.

b. Solutions to raw material and energy assurance

- Iron ore, coke, scrap steel are the main raw material for the manufacturing of crude steel. Only implementing investment in projects manufacturing pig iron, steel billets from iron ore in the area after having determined reliable reserves of iron ore resources, ensuring long-term, adequate and stable resources (at least15 years) and economic efficiency of the project.

- Ensuring the stable supply of steel in the country, engaged in import of scrap as prescribed by law. Fully complying with regulations on import of scrape steel and environmental protection.

- Mining fat coal resource in the country; importing fat coal and coke to meet full domestic demand.

- Steel manufacturing projects by electric furnace: Due to consumption much power. Therefore, in order to ensure adequate power supply for the project, before granting investment licenses, the investors should have agreement of the power sector where the steel refining plants are located.

c. Solution to export, import and market development

* For domestic market

- Protecting domestic market by the technical barriers and legal quality standards, preventing products of poor quality or not in accordance with the origin of goods specified in the international commitments in which Vietnam has joined.

- Improving policies on investment, manufacturing, business and market management of steel products, ensuring equality between economic sectors. Stabilizing import and export tax policy.

- Speeding up investment in capital construction to expand the domestic steel market, increasing consumption of steel products.

- Creating a close linkage, community responsibility between manufacturers with businessmen; researching and completing distribution network of steel products.

- Gradually establishing a modern steel distribution system, creating public and transparent market, reducing intermediate costs, contributing to stabilize the domestic steel market. Actively supervise the implementation of the Ordinance on price; preventing against smuggled goods, counterfeit goods, goods of poor quality to protect the interests of consumers and steel business and manufacturing enterprises.

* For foreign markets

- Improving competitiveness on price and quality of steel products. Applying new approaches to access to foreign markets. Encouraging enterprises to open representative offices abroad to promote and introduce their brands and provide information on manufacturing demand and consumption of steel of Vietnam, particularly for countries in the region.

- Developing a number of products with comparative advantage for exports such as color and zinc metal steel sheet, steel pipe, shaped steel of various types, cast iron, etc. ..

d. Solution to linkage between the steel manufacturing system and distribution system.

- Encouraging large business and manufacturing enterprises to invest in building steel distribution centers in the regions, creating conditions for these enterprises to lease space, warehouses and logistic services in order to facilitate the supply of products. The steel manufacturing enterprises should strengthen the distribution system through signing contracts with steel distributors or open agents, branches at regional distribution centers or directly participate in the steel Exchange.

- The localities shall make planning and reserve appropriate land fund to build regional distribution centers and shall give support for building infrastructure outside the fence of regional distribution centers.

- Developing vertical linkage from manufacturing – circulation -consumption of steel products. Having mechanism of binding responsibility in stages, from manufacturing to product consumption. Developing enterprises which carry on specialized business, multidisciplinary commerce and wholesale with the system of warehouses and distribution centers by modern methods for supply to the retail systems.

- Developing system of distribution center and services in large urban areas to ensure high synchronicity (warehouse, transportation, processing services as required…). Reorganizing the existing facilities in accordance with each locality, to create favorable conditions for the distribution circulation.

- Building distribution centers and logistic services of steel industry in accordance with the construction planning and urban development, planning for transport development, land, socio-economic development in the provinces, cities, economic zones in the country. Managing and efficiently using the existing facilities of the industry, combining with the improvement and upgrading and new construction, maximizing result from investment, business and ecological protection

e. Solutions to training and development of human resource.

- Speeding up the training of human resource for the steel industry, especially a team of qualified and skilled technicians. Strengthening the technical infrastructure, improving training programs to improve the quality of training.

- Associating the training with manufacturing, enhancing cooperation relation between schools with the steel and pig iron manufacturing facilities and reseach institutes.

g. Technology solution

Applying advanced and modern technology with low material and power consumption rate to ensure the requirements of emission and eco-friendliness, installing automatic monitoring system for emission..

- Capacity scale of metallurgical equipment must meet the following requirements:

+ Blast furnace technology: For areas without concentrated sources of iron ore, blast furnace requires a minimum capacity of 500 m³ (excluding specialized blast furnace manufacturing cast iron for mechanical engineering industry); for area with concentrated sources of iron ore, blast furnace requires a minimum capacity of 700 m³; for projects using imported iron ore, located in coastal areas, blast furnace requires a minimum capacity of 1000 m³;

+ Electric arc furnace technology: minimum capacity of 70 tonnes / batch;

+ Oxygen furnace technology: minimum capacity of 50 tonnes / batch;

+ Steel rolling line: minimum capacity of 500.000 tonnes /year.

- Increasing investment in pig iron, sponge iron manufacturing projects by non-coking metallurgical technology. Step by step upgrading and replacing small plants with and outdated technology.

By 2020, essentially removing all pig iron, steel billet manufacturing plants, steel rolling lines with small capacity (except blast furnace manufacturing cast iron in service of mechanical engineering industry, specialized furnace casting mechanical parts, lines of stainless steel rolling and steel of high quality). From 2013 onwards no investment license granted for new projects with outdated technology, environmental pollution, energy consuming. The investment projects must comply with national technical Regulation on technology and equipment of pig iron and steel manufacturing as prescribed by the Ministry of Industry and Trade.

h. Solution to environmental protection

- Restricting and minimizing environmental pollution. The new investment projects must be equipped with advanced technology for pollution control and waste treatment up to environmental standards;

- Strictly controlling emissions, wastewater, dust etc. .. at the pig iron and steel manufacturing facilities. Inspecting the import of used metallurgical equipment;

- Developing and promulgating environmental standards for the steel industry, improving the capacity and efficiency of waste management activities, reseaching and applying recycling technology of solid waste, heavy dust, emissions, etc.. emitted during the manufacturing of pig iron and steel;

- Strengthening management and institutionalizing the law on environmental protection. Promptly handling of environmental violations. Encouraging enterprises to adopt cleaner manufacturing technologies for energy saving and environmental protection.

i. Management solution

- Strengthen inspection, monitoring and management of investment projects as prescribed by law. The Ministries, sectors and localities shall perform functions and duties under the authority. Coordinating and closely managing the granting of investment certificate for the pig iron and steel manufacturing projects as prescribed;

- Step by step developing the modern and transparent method of steel distribution to ensure the stability of steel market;

- Completing the system of import and export tax policy of steel products. Researching and promulgating national technical Regulation on pig iron and steel manufacturing technology and equipment;

- Promptly preventing and handling enterprises which have not complied with regulations on production and business of steel products. Strengthening inspection and control over the market, preventing speculation and hoarding, fake, etc. ..

Article 2. Implementation organization

1. Ministry of Industry and Trade:

- Taking responsibility for publication of planning, monitoring and inspecting the investment, business and manufacturing of steel industry in accordance with approved planning. Making periodic report on the implementation and proposing the adjustment of the Planning in accordance with the situation of social -economic development of the country;

- Examining and giving opinion on the investment projects of steel industry as prescribed.

- Assuming the prime responsibility and coordinating with the Ministries, sectors and localities to deal with the difficulties and problems of projects; proposing mechanisms and policies for sustainable and stable development of Vietnamese steel industry;

- Assuming the prime responsibility and coordinating with the Ministries, sectors concerned to develop and promulgate the national technical Regulation on pig iron, steel manufacturing technology and equipment.

- Strengthening the management of the market against fake, commercial fraud. Directing the developed of modern, transparent and efficient steel distribution system, helping stabilize the steel market. Strengthening trade promotion, supporting the search operations and development of exporting market of pig iron and steel products.

2. The Ministry of Planning and Investment, Finance, Science and Technology, Natural Resources and Environment, National Defense according to their functions shall coordinate with the Ministry of Industry and Trade to concretize mechanisms and policies on development of manufacturing and distribution of steel mentioned in this Decision to implement the Planning.

3. People’s Committee of centrally-affiliated cities and provinces shall:

- Direct the implementation and management of investment and development of steel manufacturing facilities in the area in accordance with the provisions of the Investment Law and this Planning;

- Coordinate with the Ministries and sectors concerned to organize and inspect the implementation of the Planning; promptly handle and remove difficulties of investors and steel manufacturing facilities in the area;

- Direct the market management force in the area to coordinate with the authorities to strengthen the inspection and control prices of steel products; prevent speculation, fake and ensure price stability steel in the area.

4. Vietnam Steel Association:

- Act as a link between the enterprises in the industry; proactively propose and participate with relevant ministries and agencies in the development of mechanisms and policies; develop information supply system on steel manufacturing and business to support the management and administration of manufacturing and business.

- Coordinate with other Ministries and sectors concerned in management of manufacturing and business helping to stabilize steel products.

Article 3. This Decision supersedes the Decision No. 145/2007/QD-TTg dated September 4, 2007 of the Prime Minister and shall take effect from the date of issuance.

Article 4. The Ministries, ministerial-level agencies, government-attached agencies and People's Committees of centrally-affiliated provinces and cities and agencies concerned are liable to execute this Decision. /.