Japanese steelmaker JFE Steel Corporation has announced that it will acquire a five percent stake in Formosa Ha Tinh Steel Corporation (FHS), a joint-venture company that is currently constructing Vietnam’s first integrated steel mill. The project is being led by FHS’s founder, Formosa Plastics Group (FPG), a Taiwanese integrated supplier of petrochemicals. JFE Steel and FPG are expected to sign the investment agreement in the near future. JFE Steel will also provide the project with technical support.
The integrated steelworks will include a hot rolling mill, blast furnaces and a steelmaking facility, while the new facility will start operations this fall. FHS is investing $10.5 billion in the first phase of the project. The initial crude steel output capacity is expected to be approximately 7 million mt per year.
JFE Steel stated that it has been considering opportunities to establish an integrated steel mill in Southeastern Asia or India to meet the increasing demand for steel products in emerging countries. Vietnam is experiencing steady economic development and stable expansion of its domestic steel demand. Steel demand in Southeast Asia is also forecast to grow steadily. Vietnam is expected to become a key supply base for steel products used locally, as well as in the Southeast Asian region and beyond.
Additionally, under the medium-term business plan from April 2015 to March 2018, JFE Steel aims to increase its annual steel sales to 40 million mt. The company’s investment in FHS will be one of its first major steps toward achieving this target.