Saturday, November 17, 2007

Japan's Nippon Steel proposes $3 billion iron smelter for Thailand

Southern Seaboard is proposed new site


Tokyo _ Japan's leading steel company, Nippon Steel, is considering investing in an iron smelter that would cost US$3 billion and be located on a Thai government-owned industrial estate in the Southern Seaboard.

The company demonstrated a ''strong intention'' to pursue the venture in talks with Thai officials holding an investment roadshow in Japan, Industry Minister Kosit Panpiemras said yesterday.

He said the company was now preparing a draft of letter of intent to submit to the Thai government. The Industry Ministry and related agencies would spend six months conducting a feasibility study together with Nippon Steel and review all technical details in depth.

''The project requires massive capital, they definitely need to be extremely cautious,'' Mr Kosit said.

Thailand's Sahaviriya Group has begun developing its own 500-billion-baht smelter, the country's first, at its site in Prachuap Khiri Khan province. The entire project would take place in five phases over 15 years, with production in the first phase due to begin in 2009.

Sahaviriya director Win Viriyaprapaikit denied a rumour that Nippon Steel had approached the Thai company about a joint venture in the Sahaviriya project.

Mr Kosit said the investment by Nippon Steel would exclude the costs of land and infrastructure that the government would offer to develop and operate for the investors.

Another leading Japanese steelmaker, JFE Steel, also has reportedly expressed interest in a venture in Thailand.

The Thai delegation led by the Board of Investment also held talks this week with Nissan and Suzuki, which have agreed to invest in eco-car production, but details were not disclosed.

The government wants to create a major industrial hub in the South, to stimulate the region's economy and ease pressure on the heavily industrialised and polluted Eastern Seaboard.

The development would focus on the coastline of the Gulf of Thailand from Chumphon to Nakhon Si Thammarat, with a deep-sea port, rail links, industrial estates and upgraded power and water utilities.

Authorities want to have an iron and steel industrial estate as the centrepiece of the project, along with other estates for rubber, palm, automotive and petrochemical industries.

''The project's infrastructure will be designed to serve the particular needs of each of our target industries. Details may take quite a long time to work out before construction starts ... because we don't want to repeat the problems seen at Map Ta Phut,'' Mr Kosit said, referring the the large industrial estate in Rayong.

Nippon Steel already operates a cold-rolled steel plant in Rayong through The Siam United Steel (1995) Co, with annual capacity of one million tonnes.

Thailand currently consumes 12.5 million tonnes a year of steel, of which 4.5 million tonnes are imported high grade steel.

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