HANOI, POSCO, the world's third-largest steel maker, is considering developing the most extensive steel project in Vietnam using investment capital amounting to US$4.5 billion, the Ministry of Planning and Investment revealed.
An agreement signed between Posco and the Vietnam Shipbuilding Industry Group (Vinashin) in a South Korea - Vietnam investment forum in Seoul this May prompted the project. Located in Van Phong Bay in the south central coastal province of Khanh Hoa and adjacent to Vietnam's key transhipment port project, the hot-rolled steel mill marks increasing investment in Vietnam by the Republic of South Korea.
The plant will have an initial annual production capacity of 4 million tonnes and will reach its full output of 8 million in the second phase, the ministry said.
Once approved, the Korean steel giant will complete the feasibility plan within this year and begin construction in 2009, reaching completion in 2010.
In order to secure the project, Posco will form a venture with Vietnam's largest shipbuilder, Vinashin, in which Vinashin will hold a 30 per cent stake in the mill, according to the ministry.
Earlier this month Posco started constructing a $1.13 billion cold-rolled steel plant, scheduled to begin production in 2009 in the southern coastal oil-rich province of Ba Ria-Vung Tau.
The group is also building a $13.8 million steel processing facility in nearby Dong Nai Province.
Vietnam News was unable to reach Posco's officials yesterday for an interview.
This project affirms the Republic of South Korea's continued investment in Vietnam which has totalled close to $6 billion. Already one of Vietnam's largest investors, the new deals will almost double that investment.
Not the first development of its kind, last September the government licensed Taiwanese Tycoons Worldwide Steel to invest $1 billion in a steelworks factory in the Dung Quat Industrial Zone in the central province of Quang Ngai.
Overall, steel makers in the country had an annual production capacity of some 6 million tonnes by late last year, according to the Vietnam Steel Association. However, Vietnam's partial dependence on steel ingot imports has made local-made steel products less competitive compared with imported products.