Kobe Steel uses iron might in Thach Khe

July 09, 2012 | 09:04
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Kobe Steel, the world’s fourth largest steel-maker, is taking aim at Vietnam’s largest iron mining project.
illustration photo

State-run mining group Vinacomin, the project’s current biggest stakeholder, has just informed the prime minister that it would either sell part of its stake in the Thach Khe Iron Joint Stock Company (TIC) to Kobe Steel or set up a joint venture with the Japanese heavyweight.  

In the first scenario, Kobe Steel would hold a 3 or 9 per cent stake of TIC upon TIC’s restructuring plan, already tabled for prime ministerial approval. The other option would see Vinacomin and Kobe Steel negotiate to set up a joint venture with Kobe Steel to hold a major stake.

“Once the restructuring plan is complete with prime ministerial approval, Kobe Steel will have the possibility to take part in TIC as Vinacomin intends to hold a 51 per cent stake in the mining firm,” said Vinacomin’s proposal to the government.

Located in the central Ha Tinh province, geologists estimated Thach Khe deposit had iron ore reserves of some 500-600 million tonnes, at least 300 million tonnes of which is thought to be commercially exploitable. The estimated investment capital of the first mining phase with the capacity of five million tonnes per year is around $400 million.

Established in May 2007, TIC which was formerly comprised of Vinacomin with 30 per cent, state-run Vietnam Steel Corporation or VNSteel (20 per cent), Ha Tinh Mining and Trading Corporation or 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 headed for the exit and sold their stakes to Vinacomin.

Vinacomin asked for prime ministerial approval to raise its stake in TIC to either 54 or 60 per cent.
Preparations for mining works at Thach Khe deposit stopped in mid-2011 due to this restructuring plan.

In 2010, Kobe Steel was licenced to develop a 2.4 million tonne capacity steel plant in neighbouring Nghe An province. Kobe Steel is now awaiting permission to acquire a stake of TIC which would enable the Japanese company to become self-sufficient in raw materials for its steel plant. This plant will use the next-generation ITmk3 iron-making process.

India’s Tata Steel, which is seeking an investment certificate for its $5 billion steel refinery plant in Ha Tinh province, also wants a slice of TIC.

By Nguyen Chung


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