Essar plans $527 mn steel unit in Vietnam

The country's fourth-largest steelmaker, Essar Steel, today said it would partner two state-run Vietnamese companies to build a $527 million plant in that country. The facility will have an annual capacity 2 million tonne of hot-rolled coils, sheets and skin passed coils.

The project, to be located in Phu My Industrial Zone, Baria Vung Tau province, in south Vietnam, is expected to be completed in 30 months.

Essar Steel Vietnam Holdings (ESVHL) today forged a joint venture with Vietnam Steel Corporation (VSC) and Vietnam General Rubber Corporation (GERUCO). The JV has been christened Essar Vietnam Steel Corporation.

While ESVHL will own 65 per cent equity in Essar Vietnam Steel Corp, VSC will hold 20 per cent and GERUCO 15 per cent.

ESVHL is a subsidiary of Essar Steel Holdings (ESHL), which is a part of Essar Global with interests in steel, energy, power, communications, shipping and logistics and projects.

Baria Vung Tau province is well connected by road and is in proximity to the proposed port.

Vietnam consumes six million tonne of steel, of which hot-rolled coils account for two million tonne. The steel consumption is expected to go up to 10 million tonnes by 2012.

In the absence of a flat steel plant, Vietnam imports its entire requirement of hot-rolled coils. The project is expected to substitute imports of hot-rolled coils into the country, saving valuable foreign exchange.

VSC, which is a fully-owned unit of the Vietnam government, has several steel plants, both in north and south of Vietnam. The two recent plants commissioned by VSC are a 0.4 million tonne a year cold rolling plant and a 0.5 million tonne per year Mini Mill - both located in Phu My Industrial Zone, Baria Vung Tau province in southern Vietnam.Another partner in the joint venture GERUCO is the largest rubber company in Vietnam and is a global supplier of natural rubber & latex.

Vietnam would be the second location outside India, where Essar would have a presence. The company has a 0.4 million tonne production facility in Indonesia, apart from the 4.6 million tonne plant in India.Meanwhile, Essar Steel today informed the stock exchanges that the company would be seeking shareholders approval for delisting shares through postal ballot.