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BL Research Bureau

The joint venture agreement of Tata Steel, through its wholly-owned subsidiary Tata Steel Global Holding Pte Ltd, Singapore, with Vietnam Steel Corporation (VSC), the largest steel company in Vietnam and Vietnam Cement Industries Corporation (Vicem) for setting up a 4.5 million tonne (mt) steel complex in Vietnam is a further step in Tata Steel’s efforts to pursue growth through geographical diversification.

Previous investments in UK’s Corus (20 mt), Thailand’s Millennium Steel (1.7 mt) and Singapore’s NatSteel Asia (2 mt) have already helped the company establish a sizeable footprint in Europe and South East Asia.

The proposed Vietnam steel complex is to be located in Vung Ang Economic Zone in the Ha Tinh province. Tata Steel would have a stake of 65 per cent in the project, VSC 30 per cent and Vicem 5 per cent.

The MoU for this project was signed earlier in May 2007 and definitive agreements were signed today for the proposed steel project.

Vietnam has a growing population and strong demand for steel products and the joint venture would enable Tata Steel to tap into this growth market.

Significantly, the joint venture would enable Tata Steel to have a stake of 30 per cent in Thach Khe Iron Ore Joint Stock Company, enabling access to the Thach Khe iron ore mine. This may be significant given globally tight supplies of iron ore, a key input to the manufacture of steel.

For VSC, the long-term partnership with Tata Steel would enable it to exploit opportunities in the country, by accessing the Indian company’s strong technical and knowledge base.

More Stories on : Stocks | Overseas Investments | Tata Steel Ltd | Steel

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