Relevant ministries and agencies have proposed ending the Phuong Nam Pulp Mill project, one of 12 loss-making mega projects in the industry and trade sector.

The suggestion was made at a meeting on March 26 chaired by Deputy Prime Minister Le Minh Khai.

The Ministry of Industry and Trade (MoIT) reported that the project has proved unfeasible due to a lack of a material growing area. An area designated for growing jute, the main material for pulp production, no longer exits. A solution to adjust the plant’s production with the use of other kinds of materials was also not feasible because of a lack of consumption markets.

The investor has also encountered difficulties in handling financial issues.

The MoIT earlier carried out a plan to conduct an asset auction for the project but failed because of a lack of interest.

In 2003, the Transport Development Investment Company was granted a license to build the Phuong Nam Pulp Mill, with total capital of over VND1.48 trillion ($62 million). It had a designed capacity of 100,000 tons of pulp a year.

In November, 2007, the company adjusted its investment capital to more than VND2.28 trillion ($95.3 million). As the investor met with difficulties, the Prime Minister decided to transfer the project to the Vietnam Paper Corporation (VINAPACO).

In 2012, VINAPACO adjusted the investment capital to over VND3.4 trillion ($142 million) and found different plans to put the plant into operation, but failed.

In 2014, the Prime Minister approved an MoIT proposal to stop investment in the project and asked the ministry to find solutions to handle the project in line with regulations.