14:44 | 30/07/2015 Economy
Japanese JFE Steel Corporation has decided to join the integrated steel project from Taiwanese conglomerate Formosa Plastics Group in Vung Ang Industrial Zone, central Ha Tinh province.
Construction site for a steel plant under the Formosa project in Vung Ang. (Image credit: VNA)
It is expected that concerned parties will reach an agreement in August in which JFE contributes about 5% of the project’s total investment capital (equivalent to JPY30 billion, around US$242 million) and the Japanese corporation provides technical assistance during the semi-finished product processing stage. Following the agreement, JFE would become the first Japanese steel corporation to invest in this field in Southeast Asia.
According to assessments from JFE, after participating in the project, JFE will export semi-finished products produced from the project in Vietnam, replacing those which were normally exported from Japan. In the immediate future, JFE will focus on steel products for construction. Later, the group will extend production towards producing ‘flat’ steel products for the automotive manufacturing sector. JFE also will also consider contributing capital to the project's second phase.
JFE aims to develop a stable steel supply source for Japanese companies investing heavily in Southeast Asia. According to calculations by JFE, blast furnace technology will assist businesses in pricing competitively, and JFE may be able to expand profits in the medium term from the project.
The Ha Tinh steel project by Formosa in Vung Ang, with its first phase’s capital reaching nearly US$10 billion, will be put into operation in 2016, providing an output of 7 million tonnes of steel a year. The synchronous integrated steel complex also includes a deep water port. Formosa will invest over US$10 billion in the second phase of the project, bringing the combined capacity to 20 million tonnes a year./.