Its Chinese investor has halted construction of a solar panel factory in northern Vietnam after the government announced it had begun without the proper approvals.
Construction reportedly began in northern Bac Giang province without a construction permit or an environmental impact review.
Authorities in Hanoi suspended the project after accusing JA Solar Hong Kong Investment Limited (JA Solar), China’s leading manufacturer of solar power products, and authorities in Bac Giang province of having violated proper construction protocols.
The government issued an investment license for the $273 million project on December 30, but later learned that JA Solar had held a breaking ground ceremony a month earlier, on November 27.
On March 10, Director of Bac Giang’s Management Board of Industrial Parks, Mr. Nguyen Anh Quyen, held a press conference in which he claimed that JA Solar had selected the date based on a belief that November 27 was a lucky day. He admitted he approved the company’s actions.
Central government investigators later found that the board illegally granted JA Solar official permission to build the plant on February 21, well before environmental authorities had completed a review of its environmental impact assessment.
The company submitted the report to the Ministry of Natural Resources and Environment on February 20 and expected approval on May 4. Mr. Quyen told local media that work will only resume after the environmental assessment process is complete.
Both Mr. Quyen and the Chairman of the Bac Giang Provincial People’s Committee, Mr. Nguyen Van Linh, have apologized for having allowed JA Solar to build the plant without central government approval. The officials pledged the project will not damage the environment in any way.
Officials hope that the plant, one of the largest projects in the province, will generate more than 3,000 jobs.
JA Solar reported $2.15 billion in revenue in 2015 and operates eight solar power product factories in Europe, the US, and Japan. In the third quarter ending September 30, 2016, JA Solar earned income of $6.6 million, compared to $38.8 million in the third quarter of 2015 and $24.6 million in the second quarter of 2016. During the first nine months of 2016, its net revenue increased 9 per cent year-on-year to $624.3 million.
Last July, JA Solar signed an agreement with the Saigon Bac Giang Industrial Park JSC (SBG), a subsidiary of the Ho Chi Minh City Stock Exchange (HoSE)-listed Kinh Bac City Development Corp. (KBC), to lease 88 ha of land at the industrial park to develop the solar cell manufacturing project, which could have investment of over $1 billion.
The JA Solar plant has investment capital of $320 million planned for the first three years. Once operational, the plant will have an assembly capacity of 1.5 gigawatts (GW) and generate revenue of $500 million per year.
The Chinese company has a nameplate solar cell capacity in Malaysia of close to 1GW, and the Vietnam plant would serve to augment its overseas production hubs that are intended to serve the US and European markets; markets that remain prohibitively expensive for Chinese-produced solar components due to the various trade barriers.
Last September, the company voluntarily withdrew from the EU’s Minimum Price Undertaking (MIP), a move triggered by the continued price declines in solar modules and JA Solar’s increased overseas capacity. At the time, JA Solar CEO Mr. Baofang Jin said that the current MIP does not reflect recent price trends in the market, and stressed that it “adversely impacts our ability to execute our business strategy.”