Vietnam Steel, the state-run company, and India’s Essar Group will establish a $527 million joint venture to build a hot-rolled steel mill, a Vietnamese official said Monday.
“The company will be a share-holding entity with Essar as one of the founding shareholders,” the official in the Vietnamese company’s investment department said.

Vietnam’s largest steel producer, known as VSC, and the Vietnamese rubber group Geruco were to sign a contract with Essar later Monday to establish the company. Essar would hold a majority 65 percent stake.

VSC would hold 20 percent and Geruco the remaining 15 percent. The company is to operate the mill to produce two million tons of steel sheets a year, the VSC official said.

The mill, to be completed in the southern province of Ba Ria-Vung Tau in 2009, is to use metal imported from India, Dau Tu, a newspaper run by the Planning and Investment Ministry, 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 steel plant in Iran with a capacity to produce 1.5 million tons a year.

Geruco, the short name for Vietnam General Rubber Corp., 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.

Vietnam relies on the imports of steel and raw materials, mainly from China. Last year, its imports of the products edged up 1.8 percent from 2005. (Posted by Reuters - Monday, February 12, 2007)