Tata Steel enters JV with Vietnamese cos. to set up $5 billion steel plant

Tata Steel, along with Vietnam's largest steel company, Vietnam Steel Corporation (VN Steel) and Vietnam Cement Industries Corporation (VICEM) signed the JV agreement to set up a 4.5 million tonnes per annum (MTPA) steel complex in the Vung Ang Economic Zone in Ha Tinh province.

While Tata Steel, through its wholly owned subsidiary in Singapore, Tata Steel Global Holding Pte Ltd, will have 65 percent stake in the JV, VN Steel and VICEM will hold 30 percent and 5 percent respectively.

The complex is expected to create jobs for 20,000 people when complete, a Tata official said. The JV would also enable Tata Steel to extend an equity contribution of 30 percent in Thach Khe Iron Ore mining project, the official added.

"The Integrated Steel Plant will be built in three phases at a total estimated cost of $5 billion. While the ultimate capacity of the steel complex will be 4.5 million tonnes per year, the first phase of the complex will be a Cold Rolling Mill to be commissioned by end 2010," Tata Steel said in a statement.

"We are delighted to enter into the joint venture with VN Steel and VICEM, and believe that this partnership is well placed to make the most of the tremendous growth potential Vietnam possesses. Together, we look forward to seeing this country grow and prosper. We are excited to be a part of this landmark project that is slated to bring sustainable and long-term value to our companies and customers, and accelerate the development of Vietnam. On our part, we remain committed to bring high standards of corporate governance, environment protection, and a strong culture of striving for excellence. We also highly appreciate the support we have got from the Government of Vietnam and the leaders of Ha Tinh province proving once again that Vietnam is a cherished destination for serious foreign investors," B. Muthuraman, managing director, Tata Steel, said.

"The JV will enable VN Steel to expand and create a substantial knowledge and technical base, while building a long term relationship with Tata Steel. In Tata Steel, we have a strong partner to help us exploit the opportunities within our country, and make the most of our market potential. Setting up of an integrated steel plant will enhance Vietnam's status in the steel industry, and maximize the value of Vietnam's natural resources while strengthening our national economy and increasing job opportunities. We look forward to an enduring partnership with our JV partners to meet the challenges of the future," said Dau Van Hung, president, VN Steel. VN Steel is currently Vietnam's top steel maker with a capacity of around 5 MTPA and the new plant will almost double the annual production capacity for the country, which contributes less than 0.5 percent of the world's total annual production of 1.34 billion tonnes.

"VICEM is honored to have this unique opportunity to establish a JV with Tata Steel and VN Steel and trust that this venture will add momentum to the economic progress of our country, and go a long way in addressing the country's demand for self-sufficiency in steel. Vietnam is a very attractive market, with a growing population and demand for steel products, and this joint venture will be a strong platform to pursue growth opportunities," said Nguyen Ngoc Anh, general director, VICEM.

Tata Steel's announcement comes within days of its decision to scrap its proposed $3 billion investment plan in Bangladesh due to lack of commitment from the state government which is suffering from political instability.

ABOUT TATA STEEL

Established in 1907, Tata Steel has grown to become the world's 6th largest steel company with an existing annual crude steel capacity of 30 million tones after it acquired Anglo-Dutch steel maker Corus for nearly $13 billion. Asia's first integrated steel plant and India's largest integrated private sector steel company, Tata Steel is now the world's second most geographically diversified steel producer, employing over 82,000 people and with operations in 27 countries and commercial presence in over 50 countries.

Featuring in the Fortune Global 500 Companies list, Tata Steel completed 100 glorious years of existence on August 26, 2007 following the ideals and philosophy laid down by its founder, Jamsetji Nusserwanji Tata. The first private sector steel plant which started with a production capacity of 1,00,000 tonnes has transformed into a global giant.

Tata Steel plans to grow and globalize through organic and inorganic routes. Its 6.8 million tonnes per annum (MTPA) Jamshedpur Works plans to achieve 10 MT capacity by 2010. The company also has three greenfield steel projects in the states of Jharkhand, Orissa and Chhattisgarh and proposed steel making facilities in Vietnam.

Through investments in Corus, Millennium Steel (renamed Tata Steel Thailand) and NatSteel Asia, Singapore, the Tata Steel has created a manufacturing and marketing network in Europe, South East Asia and the Pacific-rim countries. Corus, which manufactured over 20 MT of steel in 2008, has operations in the UK, the Netherlands, Germany, France, Norway and Belgium. Tata Steel (Thailand) is the largest producer of long steel products in Thailand with a manufacturing capacity of 1.7 MT. NatSteel Asia produces about 2 MT of steel products annually across its regional operations in seven countries.

Tata Steel, through its joint venture with Tata BlueScope Steel Limited, has also entered the steel building and construction applications market.

The iron ore mines and collieries in India give the company a distinct advantage in raw material sourcing. Tata Steel is also striving towards raw materials security through joint ventures in Thailand, Australia, Mozambique, Ivory Coast (West Africa) and Oman.

Exploration of opportunities in titanium dioxide business in Tamil Nadu, a ferro chrome plant in South Africa and setting up of a deep-sea port in coastal Orissa are integral to the growth and globalization objective of Tata Steel.

Tata Steel is the flagship company of India's most respected and second largest business conglomerate, the Tata Group, which has business interests in steel, automobiles, software, telecommunications, hotels and consumer products, among others.

The Tata Group reported revenues in 2006-07 of $28.8 billion, about 3 percent of the country's GDP, and net profit of $2.8 billion. The group comprises 96 companies with over has 27 publicly listed enterprises and operates in more than 85 countries across six continents, employing over 3,50,000 people.