Vietnam gives okay to Tata Steel venture

MUMBAI: The Vietnam government on Monday gave the go-ahead to Vietnam Steel Corporation to work with Tata Steel to set up a $3.5-billion steel complex in the country’s central region. According to ET’s earlier report, Essar Steel along with South Korea’s Posco and China’s Bao Steel was also vying for the project.

This will be the Indian steel major’s second major foray in the country after its Singapore subsidiary NatSteel recently bought two steel bar rolling plants for $41 million. Tata Steel already makes 120,000 tonnes of steel through its unit in Vietnam. The company’s stock was up 5.3% at Rs 622.9 on the BSE on Monday.

A statement on the Vietnam government’s website on Monday said that “the government granted its approval on May 18 for the unlisted Hanoi-based firm to sign a memorandum of understanding on the investment in Ha Tinh steel complex.”

In a recent statement, Vietnam’s ministry of planning and investment said the country plans to build the 4.5-million-tonne steel project, which “has been drawing special attention from foreign investors.” The country’s annual steel demand is pegged at 6 million tonnes, including 2 million tonnes of hot rolled steel that is entirely imported. Vietnam’s steel consumption is expected to rise to 10 million tonnes by 2012, according to recent reports.

Essar Steel has already signed a memorandum of understanding with Vietnam Steel Corporation to set up a 2-million-tonne hot strip mill at a cost of $520 million. The Ruias, in their agreement with the Vietnam Steel, agreed to take a 65% equity stake in the hot strip mill.