DEVELOPMENT OF THE IRON AND STEEL INDUSTRY IN NORTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78T02095R000800070018-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 20, 2016
• Document Release Date: December 22, 2005
• Sequence Number: 18
• Publication Date: October 1, 1964
• Content Type: REPORT

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SECRET
INTELLIGENCE MEMORANDUM
DEVELOPMENT OF
THE IRON AND STEEL INDUSTRY
IN NORTH VIETNAM
DIRECTORATE OF INTELLIGENCE
Office of Research and Reports
NGA review(s) completed.
SECRET
N2 102
CIA/RR EM 64-34
October 1964
GROUP 1
Excluded from automatic
downgrading and
declassification
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Sees. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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CONTENTS
Page
Summary and Conclusions . . . . . . . . . . . . . . . . . . . 1
A. Small Furnace Program . . . . . . . . . . . . . . . . 3
B. Construction of the Thai Nguyen Iron and Steel
Plant . . . . . . . . . . . . . . . . . . . . . . . 4
1. Current Status of Construction . . . . . . . . . 4
a. Coke Plant . . . . . . . . . . . . . . . . . 4
b. Blast Furnaces . . . . . . . . . . . . . . . 4
c. Facilities for Crude and Finished Steel . . . 5
2. Assistance from Communist China . . . . . . . . . 5
C. Red River Valley Iron and Steel Plant . . . . . . . . 6
II. Raw Material Base . . . . . . . . . . . . . . . . . . . . 6
A. Iron Ore . . . . . . . . . . . . . . . . . . . . . . 6
B. Coking Coal . . . . . . . . . . . . . . . . . . . . . 7
III. Current Supply and Consumption of Steel . . . . . . . . . 8
IV. Prospects . . . . . . . . . . . . . . . . . . . . . . . . 9
Photographs
Figure 1. North Vietnam: Thai Nguyen Iron and Steel
Plant following page . . . . . . . . . . . . . .
Figure 2. North Vietnam: Trai-cau Iron Ore Mine and
Concentration Plant following page . . . . . . . 8
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DEVELOPMENT OF THE IRON AND STEEL INDUSTRY
IN NORTH VIETNAM*
Summary and Conclusions
North Vietnam is building its first integrated. iron and steel
facility about 50 miles north of Hanoi at Thai Nguyen. The first
blast furnace at that site was completed and put into operation in
December 1963 and the second in September 1964. Construction is
underway on a third blast furnace and on associated facilities for
making and processing steel. The entire project is Chinese in design
and manufacture and is quite similar to the many small modern provin-
cial iron and steel plants constructed, or on which construction was
started, throughout Communist China during 1958-60. Steel produced
in these plants was characterized by its relative high cost and poor
quality. When completed late in the 1960's at a claimed cost of US
160 million, the Thai Nguyen complex will be the largest industrial
works in North Vietnam and will give the country a fledgling iron and
steel industry -- one of the status symbols among the less developed
countries.
Construction of the plant is on a two-stage building program where-
in the annual capacity of the first stage, scheduled for completion by
the end of 1965, will total about 100,000 tons** of crude steel. Dur-
ing the next several years the plant is scheduled to be expanded to an
annual capacity of about 200,000 tons of steel.. Recent aerial photog-
raphy indicates that construction probably is sufficiently advanced to
enable the North Vietnamese to complete the first stage by the end of
1965 if Chinese assistance is continued.
Operation of the Thai Nguyen complex will depend to some extent
on imports of basic raw materials. Domestic reserves of iron ore
are of sufficient grade and quantity to support easily the maximum
output planned for the new plant. The country's known reserves of
coking coal, however, are quite limited, and future requirements for
this material are to be supplied increasingly by Communist China.
Although limited amounts of pig iron and crude steel have been
produced in small primitive furnaces over the past several years,
virtually no finished steel has ever been produced in North Vietnam.
Thus, pending completion of the Thai Nguyen project, the country's
small steel-consuming industries, including construction, are dependent
almost entirely on imports. Such imports have averaged only about
40,000 tons annually since 1959; so it is apparent that once the
steel-producing and processing sections of the new plant are put into
* The estimates and conclusions in this memorandum represent the
best judgment of this Office as of 1 October 1964.
** Tonnages are given in metric tons throughout this memorandum.
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operation, the availability of finished steel for industrial consump-
tion will be expanded substantially. Significantly, however, the
product mix available from Thai Nguyen almost certainly will be
limited to common grades of wire and rod products and light struc-
tural shapes. Thus domestic requirements for high-grade rolled
steel, particularly flat-rolled products, probably will continue
to be met largely through imports.
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I. Production of Iron and Steel
A. Small Furnace Program
From 1960 until the Number 1 blast furnace at Thai Nguyen was
put into operation in December 1963, North Vietnam produced pig iron
estimated at 10,000 to 15,000 tons annually, all from a number of
small blast furnaces established near small iron mines throughout
the country. These furnaces, ranging in size from 7 to 13 cubic
meters, were constructed during 1959-60 with the assistance of Chi-
nese technicians and are similar to the primitive blast furnaces
built and subsequently largely abandoned in Communist China during
the "leap forward" period of the late 1950's. As in China, the
furnaces are relatively inefficient to operate, and the iron pro-
duced is of very poor quality.
Available information indicates that possibly 20 small-scale
furnaces have been operated sporadically in North Vietnam in recent
years, with individual annual output ranging from less than 200 tons
up to nearly 3,000 tons. An indication of the variation in the volume
of annual output for six furnaces known to have been operating in 1960
is shown in the following tabulation (in tons of pig iron per furnace):
Location
Production
in 1960
Hon Gay ,20?57'N - 107?55'E)
2,683
Vinh (18.40'N - 105?40'E)
?
805
Haiphong (20
52'N - 106?41'E)
?
1,617
X
Thai Nguyen 21
36'N - 105?30'E)
?
197
Ham Rong (19 51'N - 105
46'E)
(two furnaces)
2,798
8,100
By the end of 1960, two small side-blown converters reportedly
were using some of the pig iron produced locally for production of
crude steel, but, in the main, the small blast furnaces cater to the
needs of local handicraft industries. Although the pig iron produced
is used primarily by the North Vietnamese in the manufacture of crude
tools and castings for farm implements, limited amounts in the past
also have been used in small foundries associated with a plant making
agricultural implements and a machine building plant in Hanoi that was
supplied by the USSR.
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B. Construction of the Thai Nguyen Iron and Steel Plant
The plant layout of the small iron and steel complex now being
built at Thai Nguyen (see Figure 1) was designed for construction in
two stages. The first stage currently is scheduled to have a capacity
of 100,000 tons each of pig iron and crude steel annually and to be in
operation by the end of 1965. The first stage of construction origi-
nally was scheduled for partial completion by the end of 1960. How-
ever, the railroad from Hanoi to Thai Nguyen that was used to transport
construction materials was not opened to traffic until September 1960,
and this delay caused a revision in the construction schedule. Con-
struction of the second stage is planned to raise the total respective
capacity for iron and steel to 200,000 tons annually, presumably at
some time during the Second Five Year Plan (1966-70). The facilities
currently installed or in various stages of construction include a
byproduct coke plant, three blast furnaces, a sintering plant, a pos-
sible converter shop, rolling mills, a refractory brick plant, and an
electric powerplant. Ancillary facilities include new roads and rail
lines and other installations for receiving and handling raw materials
and for shipping products.
1. Current Status of Construction
Aerial photography during March 1964 indicated that, in
general, the facilities at the Thai Nguyen iron and steel complex
were about in the midpoint of construction. The only major component
that was operating was one blast furnace from which, according to the
North Vietnamese press, the first pig iron was poured in December 1.963.
The status of the major facilities of the new complex is discussed
below.
a. Coke Plant
Available data relating to the coke plant indicate
that the two byproduct coke batteries, each having 45 ovens, probably
will have a combined capacity of about 250,000 to 300,000 tons. The
byproduct recovery section is designed to recover chemical elements for
production of fertilizer, benzene, naphthalene, dyes, pharmaceutical
products, plastics, and asphalt. Although aerial coverage indicates
that the plant is nearing completion, the two coke oven batteries in
March 1964 were covered by temporary roofs which, along with the
absence of smoke or steam, indicated that they were not in operation.
As of mid-August, no information had become available to indicate
that production of coke had been started. Until the coke plant is
completed, most of the coke needed by the one blast furnace operating
probably is being shipped in by rail from Communist China.
b. Blast Furnaces
Communist press releases indicate that the plant,
when fully operational, will have three medium (255-cubic-meter)
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,~ .. s COKE OVENS T LDER C
am: Thai Nguyen Iron and Steel Plan
21 34N - 105 52E
SECRET
A. WATER TREATMENT AND STORAGE
B. BYPRODUCT COKE PLANT
C. PROBABLE SINTER PLANT
D. BLAST FURNACES AND STORAGE
E. POWERPLANT
F. AREA UNDER CONSTRUCTION
G. AREA G-1 AND AREA G-2 STEEL AND ROLLING
H. RAILROAD CAR REPAIR
1 ADMINISTRATION
B. . CONSTRUCTION MATERIALS
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blast furnaces, each with an estimated annual capacity of about
100,000 tons of pig iron. The aerial photography indicated that
one blast furnace was in operation, that the second was nearing
completion, and that the third was still in an early stage of con-
struction. The Communists announced that the Number 2 blast furnace
was put into operation on 20 September 1964.
c. Facilities for Crude and Finished Steel
The planned annual output of crude steel for the plant,
probably to be produced in side-blown converters, is approximately
100,000 tons by 1966 and 200,000 tons by 1970. Press reports concern-
ing the operation of small Chinese plants late in the 1950's indicate
that if Thai Nguyen is equipped with side-blown converters, the crude
steel produced probably will be both relatively high in cost and poor
in quality. Sufficient casting and rolling mill capacity is planned
to allow conversion of crude steel into usable finished steel products
including wire, rod, structural shapes, and, ultimately, the Communists
claim, steel sheet and pipe. Although aerial photography indicates that
some buildings in the steel and rolling area are complete or nearing
completion, there is no indication that any production activity is
being carried out. Early in 1964, as an interim measure until the
steel facilities are operational, North Vietnam began selling to
Japan pig iron produced at Thai Nguyen.
2. Assistance from Communist China
The development of North Vietnam's small iron and steel
industry is being financed largely by Communist China. Under an agree-
ment signed by the latter country and North Vietnam in February 1959,
a Chinese credit of US $75 million was to be used to finance con-
struction of several industrial plants, including starting the first
stage of construction at the Thai Nguyen iron and steel plant. A
subsequent agreement between the two countries provided for addi-
tional assistance for the iron and steel industry of North Vietnam.
In January 1961 a long-term credit from China was announced amounting
to US $157 million for construction or expansion of 28 North Vietnamese
industrial and transportation enterprises. Under this credit, which
was to be used from 1961 to 1967, China is scheduled to provide the
necessary aid to insure an output of 100,000 tons of crude steel annu-
ally at Thai Nguyen by the end of 1965. The North Vietnamese estimate
that the total investment for the entire complex will amount to about
US $160 million.
Under the credits, China has provided extensive assistance
in engineering and equipment for the Thai Nguyen complex and has fur-
nished a large number of technicians to install equipment, manage
operations, and train indigenous personnel. Also, North Vietnamese
operating personnel are known to have been receiving training in
Chinese steel mills in 1963-64.
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C. Red River Valley Iron and Steel Plant
Construction of another iron and steel plant, larger tha:c the
Thai Nguyen facility, has been considered by the North Vietnamese
government. Late in 1960 it was announced that preliminary planning
and surveys were to be carried out for construction beginning in 1966
of an iron and steel complex near Yen Bay (21?42'N - loo?52'E) on the
Red River in northwestern North Vietnam. The proposed site repo:>tedly
has substantial reserves of high-grade iron ore but no known deposits
of coking coal. No mention has been made in the Communist press of
this plant since 1960, and as of mid-1964 no other evidence had become
available that would indicate the North Vietnamese are going ahead with
this project.
II. Raw Material Base
Except for coking coal, North Vietnam has available domestically
the basic raw materials to meet the needs of its small iron and steel
iindustry. Proved reserves of iron ore are of relatively good quality
and sufficient to last at least 50 years at the country's planned
rate of producing iron in 1966, and sufficient quantities of limestone
and manganese are available for scheduled blast furnace operations.
Although indigenous reserves of coking coal are limited, the necessary
requirements of this raw material are readily obtainable from Communist
China. Scrap requirements for producing steel are nominal in the side-
blown converter process and should present no problem.
A. Iron Ore
By world standards, North Vietnam is a very minor producer of
iron ore, but output will increase considerably over the next several
years to meet planned domestic requirements. From an estimated output
of 66,000 tons in 1963, North Vietnamese forecasts indicate production
of at least 300,000 tons of iron ore by 1966. Although such an increase
will be substantial for North Vietnam, output in the latter year will
continue to be quite small, equal, for example, to less than 10 percent
of production in North Korea in 1963. Estimates of production of iron
ore in North Vietnam during 1960-63 are as follows (in tons):
1960
25,000
1961
25,000
1962
30, 000
1963
66, 000
The deposits of iron ore are scattered throughout North Viet-
nam, but many are in inaccessible areas, and others are not suffi-
ciently large to warrant exploitation. At present the principal proved
reserves are in the Thai Nguyen - Bac Kan area, approximately 5 miles
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east-northeast of the Thai Nguyen iron and steel complex; the Red
River area in the northwestern part of the country; and on the island
of Ke Bao in the coastal area of the Hong Quang Autonomous Zone.
Mines serving local industry are widely scattered along the coast
in Hoa Binh (17?52'N - 106?25'E), Phu Tho (17?15'N - l06?451E),
Tuyen Quang (21?49'N - 105?13'E), Thanh Hoa (19?48'N - l05?46'E),
Nghe An (19?15'N - 1050l0'E), Ha Tinh (18?20'N - 105?54'E), and
elsewhere.
The deposits at Thai Nguyen - Bac Kan are the most important
known source of iron ore in North Vietnam and will be the primary
supplier to the new Thai Nguyen iron and steel plant. These deposits
contain possibly 100 million tons of magnetite and hematite ores,
which are direct shipping-grade ores that average about 60 percent
iron. In December 1963, production in this area began at the Trai-cau
mine, which is the only modern mechanized mining and dressing facility
for iron ore in North Vietnam (see Figure 2*). Production from this
mine is expected to exceed 300,000 tons of ore annually.
Deposits in the Red River valley are not being mined as yet,
but they contain possibly 10 million tons of high-grade hematite and
magnetite ores which, officials claim, average 65 to 68 percent iron.
The reserve area extends from south of Bao Ha (22?11'N - l04?2l'E)
in Yen Bay Province north along the Red River into Lao Kay Province.
Geological surveys of this region carried out since 1958 suggest that
the iron ore reserves there are significant and may prove to be the
most extensive in North Vietnam.
The Ke Bao mine contains possibly 1 million tons of limonite
ore that averages about 45 percent iron. Reopened in 1959 with an
annual output of more than 14,000 tons, this mine at present is the
second most important supplier of iron ore in North Vietnam.
B. Coking Coal
Limited resources of coking coal of unknown quality will make
it necessary for North Vietnam to depend increasingly on imports to
cover the country's requirements for metallurgical coke. Of the total
quantity of about 300,000 tons of coke needed annually, when all blast
furnaces are completed and operating, only a small part can be produced
from domestic coal; consequently, Communist China has agreed to supply
the remaining requirements for coal. The estimated production of coke
for 1958-63 in North Vietnam is as follows (in tons):
1958
43,700
1961
55,700
1959
49,700
1962
108,000
1960
55,700
1963
108,000
Following p.
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The most important producer of coking coal in North Vietnam
is the Phan Me mining area (21?42'N - 105?43'E) whose output for many
;years has supplied a major part of the coke produced from domestic
coal. Most of the coke probably is produced in small beehive or
native ovens. Early in the 1950's, known reserves in this area were
estimated to be 1.5 million tons of coking coal, an amount equivalent
to only about 6 years' supply for the modern byproduct coke batteries
at Thai Nguyen when they are completed and operating at full capacity.
In addition, the coal seams at Phan Me are underground and are diffi-
cult to work and, in view of the small reserves, are seriously threat-
ened by exhaustion.
The North Vietnamese, with East German assistance, have been
conducting experiments in coking anthracite coals, in which process
they claim some success in developing methods that may enable the
domestic iron and steel industry to use some of North Vietnam's
abundant reserves of this type of fuel. There is little likelihood,
however, that much anthracite ever will be used for this purpose.
III. Current Supply and Consumption of Steel
Until the new facilities for producing and rolling steel are put
into operation at Thai Nguyen, North Vietnam's planned requirements
for rolled steel products will continue to be met almost entirely by
imports. Domestically operated steel-processing facilities consist
of several small foundries and metalworking shops, most of which
were built under the French and the Japanese and can provide only a
small fraction of the country's total requirements for finished steel.
Although information concerning imports of finished steel in 1963 and
1964 is too fragmentary for an adequate analysis, available trade data
for 1959 through 1962 indicate imports averaging about 40,000 tons
annually. North Vietnamese imports of finished steel, made up pri-
marily of sheets, plates, and structural shapes, for 1959-62 are
shown in the following tabulation (in thousand tons):
Origin
1959
1260
1961
11962
All sources
3-0
a
Bl
24.9
26.2
27.6
31-8
oc
USSR
12.4
15.4
24.6
29.8
North Korea
N.A.
3.5
N.A.
N.A.
Communist China
8.7
N.A.
N.A.
N.A.
East Germany
N.A.
0.3
N.A.
N.A.
Poland
3.8
7.0
3.0
2.0
-Bl
N
24.8
11.2
5.4
4-5
oc
on
Japan
9.1
15.6
4.7
3.3
France
7.4
1.2
N.A.
1.0
Hong Kong
3.6
2.0
0.6
0.2
Belgium-Luxembourg
0.9
0.4
N.A.
N.A.
West Germany
3.8
N.A.
0.1
N.A.
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T
yj~g ~yy
sp- y! ~ ~'? aid. ani ?YiiR:: i ~5.
,rth Vietnam: Trai-cau Iron Ore Mine a,d Concentration Plant
21 35N - 105 58E 25X1
i 25X1
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IV. Prospects
On the assumption that Communist China will continue its exten-
sive assistance in engineering and equipment, prospects for achieving
the goals for production in iron and steel set by North Vietnamese
planners appear to be relatively good. Adequate raw materials are
available to the steel industry, and aerial coverage of the site of
the Thai Nguyen plant indicates that, when construction is fully
completed, the complex will be of sufficient size to sustain the
planned annual output estimated to be 200,000 tons of crude steel
by 1970. Although a precise breakdown of the scheduled products
in finished steel is not available, it is likely that domestic
output will go a long way toward meeting the planned requirements
of the country for common grades of bars, wire, and light structural
shapes. However, the range of finished steel products that will be
provided by the new Thai Nguyen plant almost certainly will be so
restricted that North Vietnam will require continued imports of a
variety of steel products such as heavy structural shapes, plates,
sheets (including tinplate and galvanized sheet), and, to the extent
that they are needed. various types of alloy steels.
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bEUKET
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