Tata Steel Ltd announced that it has signed a memorandum of understanding on Tuesday with Vietnam Steel Corporation, Vietnam’s largest steel company, for setting up a steel complex in Ha Tinh province in Vietnam. The plant is proposed to have an estimated capacity of 4.5 million tonnes per annum, which will be phased over ten years.

As per the MoU, Tate Steel, in cooperation with VSC, will undertake a feasibility study for the steel project. On successful completion of the study and financial closure, Tata Steel will have a minimum stake of 65% and VSC will hold the remaining 35% in the steel complex.

In addition, 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.

Tata Steel already has a joint venture with VSC through NatSteel Asia, its Singapore-based subsidiary. In order to strengthen this relationship, the Indian steel producer has decided to join hands with VSC for establishing a steel complex that is expected to take the growth of Vietnam’s steel industry to higher levels.

The report stated that while the Vietnam Government is 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 investments, the Government of Vietnam had mandated VSC to select a foreign partner for the steel project, who develops the steel project and participates in Thach Khe Iron Ore mining project with an equity contribution of 30%. VSC has selected Tata Steel as foreign partner for the steel, which has been approved by the Government of Vietnam.

Vietnam, with GDP growth of over 8% and per capital 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 are of the opinion that domestic primary steel production is fundamental for the sustainable growth of the steel industry.

About Vietnam Steel Corp

Vietnam Steel Corporation, a state-owned enterprise, is a manufacturer of steel, pig iron and other metals, refractory materials, metallurgical equipment and spare parts, downstream and non-ferrous products. Presently VSC has 12 subsidiaries and 14 joint ventures located in all major provinces over the country.

About Tata Steel

Tata Steel, the flagship of Tata Group, is a manufacturer of low cost producers of steel in the world. The company is also having interest in automobiles, telecom, IT, energy, and hotels.

Tata Steel clocked a net profit of Rs. 4,177 crores on total sales of Rs. 27,437 crores for the fiscal year ended March 31, 2007.

Stock movement

At the NSE, Tata Steel closed Wednesday’s trading at Rs. 626.80, down 0.62% on volume of 30.98 lakh shares.

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