India’s largest steel maker, Tata Steel has signed a $5 billion joint venture investment agreement in Vietnam to set up an integrated steel complex with 4.5 million tonne capacity.
Tata Steel will own 65 per cent stake in the joint venture, while Vietnam Steel Corporation gets 30 per cent and the remaining 5 per cent goes to Vietnam Cement Industries. Both these companies are state-owned firms. Vietnam Steel is Vietnam's largest steel company and currently produces around 5 million tonne steel per annum.
The integrated steel plant, which will be set up in Vung Ang Economic Zone in Ha Tinh province, will be built in three phases. In the first phase, a cold rolling mill will be commissioned by the end of 2010, Tata Steel said in a statement.
The move is part of an effort by many Indian companies to secure supplies of raw materials overseas, as a booming economy makes these appear a scarce resource at home.
The agreement enables Tata Steel to pick a 30 per cent stake in Thach Khe Iron Ore Joint Stock Company, which would undertake mining in the Thach Khe iron ore mine.
“After wining Corus, Tatas are scouting for raw material assets across the world. The investment in Vietnam was discussed and almost finalised last year. Their acquisition in iron ore mine is part of their long-term strategy to have enough raw material reserves,” said an investment banker, close to Tata Group.
Dau Van Hung, President of Vietnam Steel Corporation, Nguyen Ngoc Anh of Vietnam Cement Industries Corporation and B Muthuraman, Managing Director of Tata Steel signed the joint venture agreement at in Hanoi.
Tata Steel shares went up 0.41 per cent to close at Rs 610.45 at the BSE in Wednesday.