Tata Steel enters JV with Vietnamese cos. to set up $5 billion steel plant

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Tata Steel, along with Vietnam's largest steel company, Vietnam Steel Corporation (VN Steel) and Vietnam Cement Industries Corporation (VICEM) signed the JV agreement to set up a 4.5 million tonnes per annum (MTPA) steel complex in the Vung Ang Economic Zone in Ha Tinh province.

While Tata Steel, through its wholly owned subsidiary in Singapore, Tata Steel Global Holding Pte Ltd, will have 65 percent stake in the JV, VN Steel and VICEM will hold 30 percent and 5 percent respectively.

The complex is expected to create jobs for 20,000 people when complete, a Tata official said. The JV would also enable Tata Steel to extend an equity contribution of 30 percent in Thach Khe Iron Ore mining project, the official added.

"The Integrated Steel Plant will be built in three phases at a total estimated cost of $5 billion. While the ultimate capacity of the steel complex will be 4.5 million tonnes per year, the first phase of the complex will be a Cold Rolling Mill to be commissioned by end 2010," Tata Steel said in a statement.

"We are delighted to enter into the joint venture with VN Steel and VICEM, and believe that this partnership is well placed to make the most of the tremendous growth potential Vietnam possesses. Together, we look forward to seeing this country grow and prosper. We are excited to be a part of this landmark project that is slated to bring sustainable and long-term value to our companies and customers, and accelerate the development of Vietnam. On our part, we remain committed to bring high standards of corporate governance, environment protection, and a strong culture of striving for excellence. We also highly appreciate the support we have got from the Government of Vietnam and the leaders of Ha Tinh province proving once again that Vietnam is a cherished destination for serious foreign investors," B. Muthuraman, managing director, Tata Steel, said.

"The JV will enable VN Steel to expand and create a substantial knowledge and technical base, while building a long term relationship with Tata Steel. In Tata Steel, we have a strong partner to help us exploit the opportunities within our country, and make the most of our market potential. Setting up of an integrated steel plant will enhance Vietnam's status in the steel industry, and maximize the value of Vietnam's natural resources while strengthening our national economy and increasing job opportunities. We look forward to an enduring partnership with our JV partners to meet the challenges of the future," said Dau Van Hung, president, VN Steel. VN Steel is currently Vietnam's top steel maker with a capacity of around 5 MTPA and the new plant will almost double the annual production capacity for the country, which contributes less than 0.5 percent of the world's total annual production of 1.34 billion tonnes.

"VICEM is honored to have this unique opportunity to establish a JV with Tata Steel and VN Steel and trust that this venture will add momentum to the economic progress of our country, and go a long way in addressing the country's demand for self-sufficiency in steel. Vietnam is a very attractive market, with a growing population and demand for steel products, and this joint venture will be a strong platform to pursue growth opportunities," said Nguyen Ngoc Anh, general director, VICEM.

Tata Steel's announcement comes within days of its decision to scrap its proposed $3 billion investment plan in Bangladesh due to lack of commitment from the state government which is suffering from political instability.

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