Danieli buys into nation’s first hot strip mill project

Italy’s Danieli Group, one of the world’s three largest metals industry suppliers, last week inked an agreement to take part in Vietnam’s first hot strip steel mill.

Following the agreement with the state-run Vietnam Steel Corporation (Vnsteel), Danieli will hold a 19.9 per cent stake in the $550 million hot strip mill to be located in the southern Ba Ria-Vung Tau province’s Phu My Industrial Park, 100 kilometres south east of Ho Chi Minh City.

Construction of the mill, which will churn out two million tonnes of hot rolled coils per year, will start this year and be completed within 36 months. Antonello Mordeglia, executive vice president of Danieli Group, told VIR that the group’s hot strip mill investment would be an important milestone marking its turning point from a plant builder into an investment partner of Vietnam’s steel industry.

Present in Vietnam since 2000, Danieli has had nine major projects in the nation, from hot to cold rolling and turnkey projects in flat and long steel products. Those projects include Hoa Phat and Song Da in Hanoi, SSE in northern Haiphong port city, Tisco in northern Thai Nguyen, Phu My cold-rolled mill complex and the Phu My minimill in Ba Ria-Vung Tau.

“The hot strip mill will be of significance to Vietnam’s steel industry and the economy as it produces what the country is still absolutely reliant on foreign imports,” Mordeglia said. It is estimated Vietnam’s demand for hot rolled coils currently stands at eight million tonnes per year.

The Phu My hot strip mill was shaped in 2007 when India’s Essar Group, Vnsteel and the state-run Vietnam Rubber Group entered an agreement to build the factory. At that time, Essar agreed to hold a 65 per cent stake in the mill, Vnsteel (20 per cent) and Vietnam Rubber Group (15 per cent).

Last year, Essar decided to quit the project due to the global financial crisis. This led to a reshuffle in the project’s shareholders, which then comprised Vnsteel with a 84 per cent stake, Vietnam Rubber Group (15 per cent) and Danang Steel Company (1 per cent). With Danieli’s investment in the Phu My hot strip mill, Vnsteel now holds a 64.1 per cent stake in the project.

Dau Van Hung, general director of Vnsteel, said Danieli’s investment in the Phu My hot strip mill would help the existing stakeholders address the project’s financial questions. “We are expecting that Danieli will be the bridge to access us with international financial sources, especially from European lenders,” Hung told VIR.

Tags: Danieli Group, Vietnam steel industry, Vietnam Steel Projects