Tata Steel pact with Viet Steel for rolling mill

Tata Steel, the world's sixth largest steel maker, today signed a memorandum of understanding (MoU) with Vietnam Steel Corporation (VSC), Vietnam's largest steel company, for a cold rolling mill (CRM) complex.

Tata Steel would undertake a feasibility study for the project. On successful completion of the study and financial closure, Tata Steel would have a 65 per cent stake and VSC 35 per cent in the CRM complex.

According to an intimation to the stock exchanges, Tata Steel has said that the size, scope and investment in the cold rolling project would be determined after the feasibility study.

The MoU for CRM is aimed at strengthening ties with VSC.

Tata Steel and VSC are in the process of carrying out a feasibility study for a steel project in the Ha Tinh province for which an MoU was signed on May 29, 2007, in Hanoi.

Though the company has not mentioned the investment in the steel complex, it is estimated at $3.5 billion. The project entails a steel complex with a capacity of 4.5 million tonne.

The equity pattern after completion of the feasibility study and financial closure would be similar to the CRM complex.

Moreover, Tata Steel would also have a 30 per cent stake in the Thach Khe Iron Ore joint-stock company which would undertake mining in the Thach Khe iron ore mine.

Tata Steel believes that Vietnam, with a GDP growth of over eight per cent and per capita steel consumption of over 85 kg, is on the threshold of a significant increase in steel consumption including value-added steel.

Both the companies believe that the simultaneous development of the domestic primary steel and value"�added steel production is fundamental to the sustainable growth of the steel industry in Vietnam.

But, Tata Steel is not the only company to zero in on Vietnam.