Finally, Tata Steel gets land in Vietnam for $5-bn project

Decision to allocate 725 hectares comes after a long delay.

After two years of waiting, Tata Steel will get alternative land in Vietnam for building a 4.5 million tonne a year steel plant with an investment of $5 billion. The board of Vung Anh Economic Park has proposed allocation of 725 hectares to Tata Steel and its Vietnamese partners in the central province of Ha Tinh.

Tata Steel’s spokesperson told Business Standard the proposal had been accepted by the company. Under the proposal, 700 hectares would be used for construction of a steel plant with a designed capacity of 4.5 million tonnes a year, Indronil Sengupta, Tata Steel’s executive manager of projects in Southeast Asia told Vietnamese media.

The Indian steel maker has a 65 per cent stake in the venture, while Vietnam’s Steel Corporation and Vietnam Cement Industries Corporation hold 30 per cent and 5 per cent, respectively. Under the terms, the steel venture was supposed to get a 30 per cent stake in the Thach Khe iron ore mines.

The venture had been dogged by delay in acquiring land and tying secure supplies of iron ore. A memorandum of understanding for the project was signed in May 2007 and the joint venture (JV) agreement was reached in August 2008. The land that had been identified by Tata Steel was given away to a Taiwanese company. The JV wanted a 2.2 km stretch of shoreline. Tata and its Vietnamese partners have completed procedures for the project and were waiting for an investment licence.

Tata Steel officials earlier said it would take at least 30 months to complete the first phase of the project. Sources said the first phase would be completed by 2012, the second by 2013-2014 and the third by 2017-2018. Implementation of the third phase will also depend on the market situation and operational conditions of the Thach Khe mine.

The company plans to start with a cold rolled mill (CRM), as it will take time to develop the mine. Until it can achieve backward integration by establishing a plant to make hot rolled coils, the CRM plant will source the raw material locally.