Indian Essar to build first HR plant in Vietnam

India's major steel group Essar Steel has signed a joint venture agreement with two Vietnamese state-owned companies, Vietnam Steel Corporation (VSC) and Vietnam General Rubber Corporation (GERUCO), to build a two million mt per annum capacity hot rolling mill in that country. The mill will be the first flat steel plant in Vietnam. The agreement in question was signed today, February 12, 2007, between Essar Steel Vietnam Holdings Private Limited (ESVHL) - the subsidiary of the group in Vietnam - and the two Vietnamese state-owned companies mentioned. The name of the joint venture has been determined as Essar Vietnam Steel Corporation. As the first phase of the joint venture, a hot rolling mill with two million mt per annum capacity will be constructed. The project is estimated to cost US $ 527 million and is expected to be completed within 30 months. ESVHL will hold 65% equity in the JV, VSC will hold 20% equity while GERUCO will hold the remaining 15% equity. The project will be located in Phu My Industrial Zone, located in Baria Vung Tau province in southern Vietnam. Vietnam currently consumes six million mt of steel a year, two million mt of which is hot rolled coils. The national steel consumption is expected to go up to 10 million mt by 2012. In the absence of a flat steel plant, Vietnam imports its entire requirement of hot rolled coils. This project is expected to substitute imports of hot rolled coils into the country.