May 29 2007
Vietnam Steel Corporation, Vietnam's largest steel company today signed a Memorandum of Understanding (MoU), with Tata Steel, world's sixth largest and Asia's first integrated private sector steel company in steel making for a proposed steel complex with an estimated capacity of 4.5 million tonnes per year. The MoU was signed between Mr. Dau Van Hung, President of Vietnam Steel Corporation and Mr. B Muthuraman, Managing Director of Tata Steel in Hanoi. Also present on the occasion were representatives from the Office of the Prime Minister, Ministry of Industry, Ministry of Planning & Investment from the Government of Vietnam, His Excellency Lal T Muana, Indian Ambassador to Vietnam and Dr T Mukherjee, Deputy Managing Director (Steel), Tata Steel and other officials of VSC and Tata Steel.
While the Government of Vietnam is proactive and keen on setting its economy on a fast growth path, it also wants to achieve this on a sustainable basis. Due to its favourable policies of attracting and encouraging investments, the Government of Vietnam had mandated VSC to select a foreign partner for the Steel Project based on the principle that such a foreign partner who develops the Steel Project would be entitled to participate in Thach Khe Iron Ore mining project with an equity contribution of 30%. VSC has selected Tata Steel as the foreign partner for the Steel Project, which has been approved by the Government of Vietnam.
Tata Steel already has a Joint Venture with VSC in Rolling Mills through NatSteel, Asia which is a Singapore based subsidiary of Tata Steel. Tata Steel with the objective of strengthening this relationship is partnering with VSC in establishing a steel complex in Ha Tinh province which will be phased over 10 years. This project will take the growth of the steel industry of Vietnam to a higher trajectory. The project will bring in significant economic impact in terms of optimization of local resources, creation of employment, development of technology and earnings of foreign exchange.
Tata Steel, in cooperation with VSC, will undertake a feasibility study for the Steel Project. On the successful completion of the study and financial closure, Tata Steel will have a stake of minimum 65% & VSC will have a stake of 35% in the Steel complex. Moreover, Tata Steel will also have a stake of 30% in Thach Khe Iron Ore Joint Stock Company which would undertake mining in the Thach Khe iron ore mine.
Vietnam, with GDP growth of over 8% and per capita steel consumption of over 85 Kgs, is on the threshold of significant increase in steel consumption including value added steel. Both the companies firmly believe that domestic primary steel production is fundamental for the sustainable growth of the steel industry.