Aug 14, 2008, 5:17 GMT
Hanoi - India's Tata Steel Ltd has inked a deal with two Vietnamese state corporations to build a 5-billion-dollar joint-venture steel complex in the communist country, an official said Thursday.
The new project is the fifth major steel plant in development in Vietnam, where steel consumption and imports have risen rapidly with its economic growth.
Tata Steel signed the agreement with Vietnam Steel Corp and Vietnam Cement Industries Corp in Hanoi Wednesday, said Pham Chi Cuong, chairman of the Vietnam Steel Association.
'Signing the agreement is the first step towards building the complex,' Cuong said. 'The next step is to obtain an investment license from the government.'
Cuong said the joint venture would get a license quickly because Prime Minister Nguyen Tan Dung had agreed upon the project in principle.
He said the plant would be the second-largest steel project in Vietnam after a plant under construction by Taiwan's Formosa Group with a planned production capacity of 7.5 million tons of steel a year.
According to the agreement, Tata Steel and its Vietnamese partners would build the plant in the Vung Ang Economic Zone in Ha Tinh province, 350 kilometers south of Hanoi. Tata is to contribute 65 per cent of the total investment capital of 5 billion dollars, Vietnam Steel 30 per cent and Vietnam Cement the remaining 5 per cent.
Cuong said the first phase of the project was scheduled to become operational in 2011 and the plant would become fully operational in 2013 with an annual capacity of 4.6 million tons of steel.
Besides the Tata and Formosa Group plants, Taiwan's Tycoons and E-United are building a 1-billion-dollar plant while two other multi-billion-dollar plants by Korea's Posco and Malaysia's Lion Group are awaiting investment licenses.
According to government statistics, Vietnam spent more than 5 billion dollars to import 6.4 million tons of steel in the first seven months of this year, up 96 per cent from the same period a year ago.
The new plants would help reduce Vietnam's trade deficit, which was expected to total nearly 20 billion dollars this year.
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