Hanoi: State-run Vietnam Steel Corporation (VSC) and India’s Essar Group have signed a contract to establish a $527 million (about Rs2,319 crore) joint venture to build a hot-rolled steel mill, a Vietnamese official said.
“The company will be a shareholding entity with Essar as one of the founding shareholders,” an official in VSC’s investment department told Reuters.
Essar would hold the majority 65% stake, VSC 20% and Vietnam General Rubber Corp. or Geruco the remaining 15% in the company that will operate the mill to produce two million tonnes (MT) of steel sheets a year, the VSC official said.
Construction of the mill in Phu My industrial zone in the southern province of Ba Ria-Vung Tau would take 30 months to complete, Essar said.
The mill would use billets imported from India, the planning and investment ministry-run Dau Tu newspaper said.
Vietnam needs 6MT of steel per year, 2MT of which are hot-rolled coils, Essar said.
“This project is expected to substitute imports of hot-rolled coils into the country, saving valuable foreign exchange,” the statement said, citing Vietnam’s steel demand, which is expected to surge 67% to 10MT by 2012.
Steel and billets imported to Vietnam mainly come from China. Last year, Vietnam’s imports of the products went up 1.8% from 2005 to 5.62MT, but the value eased 0.9% to $2.9 billion, government figures show.
Essar, which has interests in telecoms to construction, is planning three steel plants in West Asia, including a 1.5MT plant in Iran. Geruco is Vietnam’s largest rubber producer, with investments in hydro power, wood processing and cement production. On Saturday, it signed a deal to become a major shareholder in the partly private Saigon Hanoi Bank.