Tata Steel told to keep off Thach Khe

The Ministry of Industry and Trade (MoIT) recently sent the Document No.6638/BCT-CNNg providing prime ministerial direction to state-run Vietnam Steel Corporation (VNSteel), the strategic partner of Tata Steel in Vietnam. The MoIT asked VNSteel to timely inform Tata Steel that the Vietnamese government turned down Tata Steel’s involvement interest in Thach Khe iron mining project.

Now Tata Steel is waiting to be licenced for a $5 billion steel refinery plant jointly developed with VNSteel and state-run Vicem with a designed capacity of 4.5 million tonnes per year in the central Ha Tinh province.

Established in 2005, Thach Khe Iron Joint Stock Company (TIC), developer of Thach Khe iron mining project, was formerly comprised of Vinacomin with 30 per cent, VN Steel (20 per cent), Ha Tinh Mining and Trading Corporation (Mitraco) (24 per cent), VNPT (4 per cent), Song Da (5 per cent), BIDV (5 per cent), Vinashin (5 per cent), Bitexco (4 per cent) and Thang Long Mineral (3 per cent). Last year, BIDV, Song Da, Vinashin and VNPT sold their stakes to Vinacomin.

According to the Document No.6638/BCT-CNNg, Vinacomin will timely have to complete its buy-out with four shareholders namely VNPT, Song Da, Hoa Phat  and Vinashin which withdrew their capital out of TIC, and then contributed the capital ratio previously registered by four shareholders in TIC.

At that time, Vinacomin would hold 60 per cent stake of TIC, VNSteel (20 per cent), Mitraco (14 per cent), Bitexco (3 per cent) and Thang Long Mineral (3 per cent).

Located in central Ha Tinh province, Vietnam’s largest iron ore mining project is estimated by geologists to hold iron ore reserves of some 500-600 million tonnes, at least 300 million tonnes of which was thought to be commercially exploitable. Preparations for mining works at Thach Khe stopped in mid-2011 due to TIC’s restructuring plan.

In a similar move, Japan’s Kobe Steel also got the thumbs down from the Vietnamese government to have a slice of TIC.

In the meantime, Prime Minister Nguyen Tan Dung asked Kobe Steel to speed up progress of its iron nugget manufacturing facility in Dong Hoi Industrial Zone in central Nghe An province and negotiate with TIC to be supplied with iron ores from Thach Khe.

With its investment certificate issued in March 2010, Kobe Steel’s $1 billion facility would use the next-generation ITmk3® iron-making process that to produce 2.4 million tonnes of iron nuggets per year.  

In July this year, Vinacomin proposed the prime minister that it would either sell part of its stake in TIC to Kobe Steel or set up a joint venture with the Japanese heavyweight to take part in TIC.