Japanese firm JFE Steel Corp, the world’s ninth-largest steel maker by output, is likely to invest 30 billion Yen ($242 million), to acquire a five per cent stake in a steel complex in Vietnam, according to a report in the Nikkei business daily.
The steel complex project has been developed by Taiwan’s Formosa Plastics in central Ha Tinh province, Vietnam and is based in the Vung Ang Economic Zone.
The two parties are expected to seal the deal as early as next month.
Eiji Hayashida, president of the steelmaker’s parent company, JFE Holdings, had earlier told Reuters that the company would decide whether to invest in the Vietnamese project by the end of the summer. Meanwhile, a JFE Steel spokesman, who called the Nikkei report “speculation”, said nothing has been decided yet.
The project that has garnered a total investment of approximately $10 billion, is expected to start operation by next spring, with an initial capacity of seven million tonnes of crude steel per year.
Formosa Plastics is learnt to have planned another $10 billion investment for secondary construction for increasing plant’s annual capacity to 22 million tonnes. The Japanese partner, reportedly, will consider additional investment in the expansion.
Last year, JFE Steel dropped its intention to build an integrated steel mill in Vietnam due to the global supply excess. By acquiring five per cent in the Vietnam-based complex, the company will be able to strengthen its global network. This is in line with a three-year business scheme launched in April, to pour 200 billion Yen overseas to drive growth, as domestic demand in Japan goes down.
Last week, Vietnam has seen an expanded construction for the Vina Kyoei steel plant in the southern province of Ba Ria-Vung Tau.
Vina Kyoei, a joint venture between three major Japanese companies in the sector – Kyoei Steel Ltd, Mitsui Steel and Marubeni – Itochu Inc – and the Vietnam Steel Corporation, has a capacity of around 500,000 tonnes of processed steel for construction, per year. The expansion is likely to double the firm’s production.