Tata Steel closer to exit

The giant Tata Steel steel manufacturing project remains deadlocked with the Indian firm forced to think about relocating the $5 billion project to other countries.

“We have communicated to the government that if this project is no more a priority for Vietnam then we should be informed now. Accordingly we can reallocate our resources in some other country,” Varun Bajaj, Tata Steel head project coordination in South East Asia region, told VIR.

However, Bajaj denied that Tata would stop pursuing the project in central Ha Tinh province’s Vung Ang Economic Zone.

Tata’s announcement comes after the investor and Ha Tinh People’s Committee failed to reach a specific agreement on site clearance costs at the 725 hectare project.

Under the Investment Law, investors do not have to pay site clearance costs, but Vung Ang Economic Zone Management Authority deputy director Nguyen Dinh Van said the costs were huge and could not be covered by the province’s budget. He estimated costs for site clearance would be around VND4 trillion ($200 million).

Van said Tata agreed to support the province in part of site clearance costs, while the local authority wanted the investor to cover all the costs. In the latest move, Van added, the Government Office announced that the government would calculate how much state budget could cover, “but the issue is that Tata has to specify how much money it can provide”.

“Tata claimed that we have been delaying granting it investment certificate too long, but actually our budget is limited while the site clearance cost is huge,” said Van.

Tata Steel’s project, initially proposed in May 2007, would produce 4.6 million tonnes per year. The project is jointly invested by Tata Steel, Vietnam Steel Corporation and Vietnam Cement Industries Corporation, in which the foreign partner committed to hold a 65 per cent stake.

“We wonder why this unique technologically innovative project promoted by the state-owned Vietnam Steel Corporation and Tata, the seventh largest steel company in the world, waited for three years to get the licence,” said Bajaj.

He said Tata had not asked anything beyond the law, but for equal and fair treatment.

“We wonder why this project is being asked to cover for the entire site clearance cost while a similar project in the same economic zone has not been asked,” he added.

The similar project Bajaj referred to is Taiwan’s Formosa Plastics Group’s seaport and steel manufacturing project. This investor had to incur 30 per cent of site clearance costs, and the remaining 70 per cent was covered by the government -VIR

Tags: Tata Steel, Vietnam steel industry, Vietnam steel market, Vietnam steel prices