Thursday, August 9, 2007

chinese firm plans $130 mln steel plant in northern Vietnam

A Chinese firm aims to build a US$130 million steel processing plant in Vietnam as mega-firms flock to tap the Southeast Asian market, the world’s largest steel importer.

Shengli Investment and Development Limited Company has signed a memorandum of understanding to build the 20ha facility at a cost of $50 million for the first phase.

The plant would be designed to churn out one million tons of steel per year in the northern province of Thai Binh.

The company plans to pump $80 million more into expanding the facility on an additional 35ha, raising its production capacity to two million tons annually.

Project launch formalities are expected to be completed soon.

Steel’s home

Vietnam is already home to several large steel projects, many of which are partnered with Korean and Indian steel groups.

At the top of the list is a $3.5 billion steel complex by India's Tata Steel and the state-run Vietnam Steel Corp (VSC).

Both sides singed a memorandum of understanding in May, agreeing raise the project in the central province of Ha Tinh, 340 km south of Hanoi, which will refine iron ore from the Thach Khe mine.

The facility aims to produce 4.5 million tons of steel products per year.

Essar Global Limited, another Indian steel marker, has joined forces with VSC and Vietnam Rubber Group to build a $527 million hot-rolled steel mill in Ba Ria-Vung Tau Province, a coastal area near Ho Chi Minh City.

Vietnam’s first hot-rolled steel plant, it will use billets imported from India to produce 2 million tons per year. Construction is expected to take around two years.

Around half its output will be supplied to cold-rolled steel plants and zinc-coating factories, and the rest for manufacturing steel pipes and structures.

South Korea’s POSCO Group, the world’s third-largest steel maker, has recently begun work on a cold-rolled steel facility in its $1.13 billion complex in Ba Ria-Vung Tau.

Posco is also looking to build a separate integrated steel mill in the country.

Dongkuk Steel Mill Co., another leading South Korean steel firm, is also considering investing in the Vietnamese steel industry.

The Korean firms view Vietnam as a gateway to the Southeast Asian market, the world's largest steel importer.

Vietnam forecasts import of over 2 million tons and production of 2.3 million tons of steel billets, and consumption of 4 million tons of construction steel this year.

Steel makers in the country had a combined annual production capacity of some 6 million tons by late last year, according the Vietnam Steel Association.

Vietnam’s partial dependence on steel billet imports has made local-made steel products less competitive as compared to imported products.

Source: Thanh Nien, TBKTVN – Compiled by Dong Ha

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