ASEAN KEY DESTINATIONS
Malaysia’s Lion, Vietnam’s Vinashin in $9.8 bn steel venture
Malaysia's Lion Industries has won approval to invest in a $9.8 billion steel mill joint venture with Vietnam's top shipbuilding group, Vinashin, Reuters reported, quoting a statement from a provincial government.
Officials at the unlisted Vinashin confirmed the deal on Monday but declined comment on details such as how much each party would invest in what would be Vietnam's biggest joint venture in value terms.
The mill, located in the south-central province of Ninh Thuan, would have annual capacity of 14.42 million tonnes of crude steel per year, a statement from Ninh Thuan's People's Committee said.
Construction would start next year and the first phase of the mill would be completed in 2011, the statement said. Investment in the first phase is estimated at nearly $2.75 billion and the whole project would be completed by 2025, the statement said.
Vinashin will use steel from the venture for its shipyards around the country, Vinashin Investment Director Le Loc was quoted as saying.
In June, Vinashin cancelled plans to invest $1 billion in a $5 billion steel venture with South Korea's POSCO.
It said it wanted to concentrate on its core shipbuilding business but the decision came as the Vietnamese government was trying to cool down the economy and fight inflation.
POSCO said it would go ahead by itself with the project in Van Phong Bay, near the south-central resort town of Nha Trang. Earlier it had said construction of the plant, which would have annual output of 4 million tonnes, would start next April.
One analyst thought some of the steel from the Lion Industries venture could go into the export market.
"There are a lot of upstream projects in Vietnam ... Building this kind of large mill means it should target the manufacturing sector because it is too large for the construction sector in Vietnam," said Keiju Kurosaka, an analyst with Daiwa Research Institute in Seoul.
"Steel demand in Southeast Asia is quite big, especially demand from the auto industry and for home appliances. They need high-grade steel. I don't know if the Malaysian Lion joint venture will make high-grade steel," he added.
Apart from the Malaysian venture, Hanoi has approved investments by foreign steel makers of at least $17.3 billion this year, including a $7.8 billion project by Taiwan's Formosa Heavy Industries and a $5 billion venture by India's Tata Steel.