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JFE Steel eyes up $4.5bn Guang Lian steel project
JFE Steel has decided to study this option before considering opportunities in other countries
E-United Group’s plans to build a $4.5 billion steel project in Vietnam have received a massive boost with steel giant Japan’s JFE Steel Corporation saying it wants to join the party. JFE Steel, the world’s sixth largest steel-maker, said it had signed a memorandum of understanding with the E-United Group, a Taiwanese corporate engaged in steel production, medical services, education and real estate, to look at the feasibility of building integrated steelworks in Vietnam.
JFE Steel would become the majority shareholder in the plant. This is a part of JFE Steel’s plan for expansion production in South East Asia or India to meet the increasing demand for steel products in emerging countries. “E-United Group already has a construction site for a steelworks facility in the Dung Quat Economic Zone in central Quang Ngai province, [so] JFE Steel has decided to study this option before considering opportunities in other countries,” the company said in a statement.
The study will initially examine the feasibility of building and launching a steelworks with an annual capacity of 3.5 million tonnes – mainly steel sheets – by 2016. If, by the end of this year, the study reaches a favourable conclusion, JFE Steel said it would partner E-United Group to launch a steel-production operation in Vietnam.
Hsueh Hung Yi, president of Guang Lian Steel - in which E-United Group holds 90 per cent of the stake, with aim to investing in the ongoing steel project in Quang Ngai, told VIR that JFE Steel had expressed interest in studying the feasibility of this project.
“JFE has a large market and deep relationships in the world. Together with E-United Group’s market, the consumption of Guang Lian Steel’s products will be ensured. This will take us to the leading position in the world,” Hsueh said.
Guang Lian Steel facility is the second largest steel project in Vietnam after Taiwan’s Formosa Plastics Group’s $7.9 billion port and steel manufacturing complex in central Ha Tinh province’s Vung Ang Economic Zone.
Last year, Guang Lian Steel got the green light from the government to raise investment capital from $3 billion to $4.5 billion to build its steel manufacturing complex with annual capacity of 7 million tonnes of steel instead of the initial plan for five million tonnes.
Hsueh said the company had completed administrative procedures to obtain an amended investment certificate from the Dung Quat Economic Zone Management Authority, adding that it also reported the planned business with JEF Steel to the ministries of Industry and Trade and Planning and Investment.
He said the stake ratio transferred to JEF Steel would be defined after the completion of feasibility study and added JEF Steel would definitely be the major shareholder in the Quang Ngai province-based steel facility.
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