Vietnam cos, Essar group in $ 527 mln steel mill

HANOI, Feb 12 (Reuters) Two Vietnamese companies and Essar group will establish a 7-million venture to build a hot-rolled steel mill to help reduce the country's reliance on the imports of hot-rolled steel coils, they said.

Vietnam needs 6 million tonnes of steel per year, 2 million tonnes of which are hot-rolled coils, Essar group said in a statement on Monday.

''This project is expected to substitute imports of hot-rolled coils into the country, saving valuable foreign exchange,'' the statement said, citing Vietnam's steel demand that would surge 67 percent to 10 million tonnes by 2012.

Steel and billets imported to Vietnam mainly come from China.

Last year, Vietnam's imports of the products edged up 1.8 percent from 2005 to 5.62 million tonnes but the value eased 0.9 percent to HANOI, Feb 12 (Reuters) Two Vietnamese companies and Essar group will establish a $527-million venture to build a hot-rolled steel mill to help reduce the country's reliance on the imports of hot-rolled steel coils, they said.

Vietnam needs 6 million tonnes of steel per year, 2 million tonnes of which are hot-rolled coils, Essar group said in a statement on Monday.

''This project is expected to substitute imports of hot-rolled coils into the country, saving valuable foreign exchange,'' the statement said, citing Vietnam's steel demand that would surge 67 percent to 10 million tonnes by 2012.

Steel and billets imported to Vietnam mainly come from China.

Last year, Vietnam's imports of the products edged up 1.8 percent from 2005 to 5.62 million tonnes but the value eased 0.9 percent to $2.9 billion, government figures show.

Essar signed a contract on Monday to establish the venture with two Vietnamese state-run firms, Vietnam Steel Corporation (VSC) and the rubber group Geruco, Vietnamese officials said.

''The company will be a shareholding entity with Essar as one of the founding shareholders,'' an official in VSC's investment department told Reuters.

Essar would hold a majority 65 percent stake, VSC would have 20 percent and Geruco the remaining 15 percent in the company that will operate the mill to produce 2 million tonnes of steel sheets a year, the VSC official said.

Construction of the mill in Phu My industrial zone in the southern province of Ba Ria-Vung Tau would take 30 months to complete, Essar said.

The mill would use billets imported from India, the Planning and Investment Ministry-run Dau Tu newspaper said.

Essar, a diversified, family-owned holding company, has business interests from telecoms to construction. It also plans three steel plants in the Middle East, including a 1.5 million tonne a year steel plant in Iran.

Geruco, the short name for Vietnam General Rubber Corporation, is the country's largest rubber producer. It has been diversifying, investing in hydro-power plants, wood processing and cement production.

On Saturday, it signed a deal to become a major shareholder in the partly private Saigon Hanoi Bank.

REUTERS PV ND1700 .9 billion, government figures show.

Essar signed a contract on Monday to establish the venture with two Vietnamese state-run firms, Vietnam Steel Corporation (VSC) and the rubber group Geruco, Vietnamese officials said.

''The company will be a shareholding entity with Essar as one of the founding shareholders,'' an official in VSC's investment department told Reuters.

Essar would hold a majority 65 percent stake, VSC would have 20 percent and Geruco the remaining 15 percent in the company that will operate the mill to produce 2 million tonnes of steel sheets a year, the VSC official said.

Construction of the mill in Phu My industrial zone in the southern province of Ba Ria-Vung Tau would take 30 months to complete, Essar said.

The mill would use billets imported from India, the Planning and Investment Ministry-run Dau Tu newspaper said.

Essar, a diversified, family-owned holding company, has business interests from telecoms to construction. It also plans three steel plants in the Middle East, including a 1.5 million tonne a year steel plant in Iran.

Geruco, the short name for Vietnam General Rubber Corporation, is the country's largest rubber producer. It has been diversifying, investing in hydro-power plants, wood processing and cement production.

On Saturday, it signed a deal to become a major shareholder in the partly private Saigon Hanoi Bank.

REUTERS PV ND1700