Hydro Agri Vietnam takes off
(Dec. 20, 2001) In December, Hydro Agri Vietnam broke ground on its first NPK fertilizer blending plant at Ba Ria-Vung Tau province, near Ho Chi Minh City.
The factory, likely to open next October, in conjunction with Hydro's 10th anniversary in Vietnam, will have a production capacity of 200,000 metric tonnes of NPK fertilizer annually.
The USD 6.5 million investment will complement Hydro's existing fertilizer activities in Vietnam. It also synchronizes with Hydro Agri's strategy to pursue business opportunities in fertilizer growth markets and focus on supplying tailor-made plant nutrients to meet local agricultural needs.
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"Asia accounts for 60 percent of the world's fertilizer consumption and is still the fastest growing fertilizer consuming region in the world," Audun Sorbotten, president of Norsk Hydro Asia, told some 200 international guests and more than a dozen local journalists.
"Norsk Hydro set up its first fertilizer operation in Hong Kong 30 years ago. Today, we have established ourselves in most of the Asian countries and fertilizer markets. Vietnam is an important agriculture country and one of the biggest fertilizer importers in the world with a fast-growing consumption rate. We are determined to play an important role in the country's agricultural sector."
Mr. Nguyen Van Nhan, vice chairman of Ba Ria Vung Tau Peoples Committee, comments: "We believe that the plant will produce complex NPK capable of replacing imports and meeting domestic and foreign fertilizer demand. At the same time, it actively contributes to environmental protection, to saving foreign exchange and making an important contribution to the renovation process."
"This plant marks our full integration into the Vietnamese agriculture sector... from being just an importer to a local producer," explains Arild Haugan, general director of Hydro Agri Vietnam.
"In 1997, Hydro Agri Vietnam got a licence to produce NPK fertilizer for the Vietnamese market and for export. The Asian economic crisis has to a great extent delayed construction of the NPK plant. However, we believe this is the right time for the project."
Building the plant has not come easy - due to Hydro Agri's internal restructuring (the Agri Turnaround process launched in 1999) and Asian economic woes, which imposed extra caution on the division's business strategy. Now that the Agri Turnaround is successfully completed, Hydro is ready to move on.
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Every good project has a solid team behind it. In Vietnam, this group includes Haugan; Hydro Agri Asia vice president (project development by contract) Mr. Arne Conradsen; Hydro Agri Asia vice president Mr. Nils Andreas Brekke; Hydro Agri Vietnam deputy general director Mr. Tran Ba Tuoc; and Hydro's Vietnamese partner, Ms. Phung Trinh Thi Vinh, chairwoman of Viet Ha Co., Ltd.
"Primary construction will start next April with a six-month building period. We are likely to open the plant in the third quarter of 2002," says Conradsen, in charge of the technical aspects of plant construction as well as one of the pioneers and project leaders for the project.
"We plan to hire a local contractor and sub-contractors for the construction but project management will be carried out by the project team from Singapore, together with an international project management consultant."
"The Ba Ria - Vung Tau People's Committee highly appreciates the good will and efforts of all partners in the joint venture. We believe that with richly-experienced experts and staff, as well as an industrious and inventive workforce, the joint venture and contractors will strongly push ahead with the implementation of the NPK plant," says Mr. Nguyen.
Hydro Agri Vietnam has been actively involved in agricultural research and development with Vietnamese institutions and universities for many years. The company has done 250 trials at more than 100 sites in over 30 provinces throughout Vietnam. It has also conducted numerous workshops and demonstrations for fertilizer application practices.
"In addition to common products such as urea and DAP, we have introduced such speciality fertilizers to the market as calcium nitrate and potassium nitrate," Haugan says. He pointed out that the company hopes to share its global NPK fertilizer experiences, including such countries as China and Thailand, with its customers in Vietnam.
"The main market in Vietnam is still the Mekong Delta where rice and vegetables are the major products. We deliver in 50 kg. bags to the market via our distributors," says Conradsen.
Vietnam is one of the longest and largest fertilizer consumers in the world. It is likely to remain so in the future. In response to the country's growing fertilizer needs, the Vietnamese government has started urea production in Phu My and is considering DAP production in northern Vietnam.
Moreover, there has been a sharp increase in domestic production of NPK bulk blend and granular product over the last few years.
"The competitive market situation in Vietnam may prompt some to consider the risks of investing more in Vietnam. However, we are confident that we have an competitive edge over many others due to our decade-old operating experience in the country and strong product brand," says Haugan.
"We know we will be able to create a leading niche for ourselves. Our NPK products will be on the market next year. We are already supplying straight fertilizer and speciality fertilizer. It is our intention to be a one-stop supplier for all varieties of fertilizer to meet varying domestic needs."
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