E United Group (義聯集團), one of the nation’s leading conglomerates, said yesterday it would undertake a joint feasibility study with Japan’s JFE Steel Corp to build a steel plant in Vietnam.
Under the memorandum of understanding (MOU) it signed with JFE Steel yesterday, E United said the purpose of the joint investment was to meet the rising demand for steel in Vietnam and help expand its reach to other markets in the region, according to a filing to the Taiwan Stock Exchange.
The Greater Kaohsiung-based group will collaborate with JFE Steel through its three steel units: Yieh Phui Enterprise Co (燁輝) and Yieh United Steel Corp (燁聯) in Taiwan, and Guang Lian Steel Co (廣聯) in Vietnam.
The group said JFE Steel, which had a crude steel production of 28.8 million tonnes in 2010, agreed to start the joint study on the planned integrated steel plant project in the Dung Quat Economic Zone in Vietnam’s Quang Ngai Province on the condition that the Japanese firm would be the majority shareholder.
“The two sides have agreed that the study would initially examine the feasibility of building and launching by 2016 a steelworks with an annual capacity of 3.5 million tonnes, consisting mainly of steel sheets. Details such as the specific product mix and necessary plant equipment will be considered during the feasibility study,” E United said in the filing.
The Taiwanese group has obtained an investment license from the Vietnamese government to develop the steelworks site in the Dung Quat Economic Zone. It is in the process of developing the site, although the global financial crisis in 2008-2009 caused some delays.
E United said if the feasibility study reaches a favorable conclusion by the end of this year, including the feasibility of developing required infrastructure and the availability of incentives, the two sides would proceed with the plan.
JFE Steel said in a separate statement that the Tokyo-based firm has been considering opportunities to establish a steelworks in Southeast Asia or India to meet increasing demand in emerging markets. E United’s steelworks site in the Dung Quat Economic Zone is just one option, it said.
“Vietnam, which is experiencing steady economic development and stable expansion of its domestic steel demand, is expected to become a supply base for steel products that are in demand both locally and in other countries, mainly in Southeast Asia,” JFE Steel said.
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