Indian steel maker to withdraw from Vietnamese project
Indian steel maker to withdraw from Vietnamese project
After five years, Tata Steel has pulled out of its US$5-billion steel project in Viet Nam, following delays in approvals and the challenging business environment in the country, according to the Indian website businessworld.in.
Tata Steel planned to invest in building a 4.5 million tonnes per annum integrated steel plant in Ha Tinh province of Viet Nam over a period of 10 years.
The proposed investment would be the largest Indian investment in Viet Nam.
The project was also part of an effort by many Indian companies to secure supplies of raw materials overseas, as a booming economy makes such resources increasingly scarce at home.
However, the project has been stalled for more than five years as the provincial government asked Tata Steel to bear the estimated land acquisition cost of $200 million for some 4,000 acres of land, according to the Hindu BusinessLine online newspapers.
The Indian steelmaker feels that the cost for land is much higher than what has been paid by other companies in similar provinces and was not willing to allocate the funds.
In July 2012, Viet Nam also sought financial assistance of $100 million from India for payment of land, as part of its efforts to break the deadlock on the project.
According to businessworld.in, during the Annual General Meeting of Tata Steel last year, Cyrus Mistry, chairman of Tata group, hinted about ending the project, while answering shareholders' questions.
It was to be built on 725 ha at the Vung Ang Economic Park in the central province of Ha Tinh. The Indian steel maker had a 65 per cent stake in the venture, while Viet Nam's Steel Corporation and Viet Nam Cement Industries Corporation held 30 per cent and 5 per cent, respectively.
Under the terms, the steel venture was supposed to receive a 30 per cent stake in the Thach Khe iron ore mines. The original plan was to build the first phase by 2012, the second by 2013-2014 and the third by 2017-2018.
A memorandum of understanding for the project was signed in May 2007 and a joint venture agreement was signed in August 2008.
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