News: Tatas buy 2 steel units in Vietnam

(DNA 09/03/2007) Kolkata - Even as Corus shareholders were voting in favour of a $12.1 billion take-over by Tata Steel, the latter’s Singapore-headquartered Natsteel Asia has concluded a deal to acquire two new steel units in Vietnam for $ 41 million.

Natsteel has inked a conditional agreement with the Vietnam Industrial Investments Ltd (VII), an investment holding company, to acquire the latter’s 100% holding in Structure Steel Engineering Pte Ltd (SSE) and a majority 70% equity in Vinausteel Ltd. The transaction is expected to be completed by June, 2007.

Natsteel, acquired by Tata Steel in 2005 for $305 million, is a two-million-tonne company that manufactures only long products based on direct induction of scrap. It has mills in Singapore, China, Thailand, Vietnam, Malaysia, Philippines and Australia. Natsteel is in the process of ramping up its total production capacity to 5-6 million tonnes over the next three to four years.

With the acquisition of two Vietnamese units, Natsteel will get two rolling mills - a 2.5-lakh-tonne wire and rod mill operated by SSE and a 1.8-lakh-tonne reinforcing bar mill operated by Vinausteel in Haiphong, North Vietnam.

In a recent interaction with DNA Money while explaining Natsteel’s south-east Asian strategy after the Tata Steel takeover, Oo Soon Hee, president and CEO, Natsteel, said the company was banking on its network of production bases in Asia and China to implement a move to get “closer to markets” and tide over shrinking demand from the construction sector in Singapore. “Long products used in construction, because of dimensions and size, are not travel friendly and, therefore, the strategy is to build catchment areas of demand for high-value long products around each production unit,” Hee said. “The Vietnamese steel market has been growing at a healthy rate over the past five years. Natsteel believes the market for steel products in Vietnam will continue to grow at a strong pace as consumption on a per capita basis is relatively low,” Hee said.