South Korea’s Posco Group, the world’s third-largest steel manufacturer, will build a hot-rolled steel plant at a cost of $4.5 billion in central Vietnam’s Khanh Hoa province.

The factory, to come up in Dam Mon peninsula, will have an initial annual capacity of 4 million tons which will later be doubled.

Posco has tied up with local shipbuilding giant Vinashin to develop the project.

Vinashin, known formally as the Vietnam Shipbuilding Corporation, will contribute 30 percent of the capital required for the project.

In a statement May the South Korean steel maker said it had signed a memorandum of understanding with Vinashin for a feasibility study to be completed by year-end ahead of construction next year.

The plant will be ready after 2010.

Posco began work earlier this month on a $1.13 billion cold-rolled and hot-rolled steel complex in the southern Ba Ria – Vung Tau province.

It will produce 700,000 tons of cold-rolled products annually from 2009 while the hot-rolled steel facility will see construction kick off only in 2010. The facility will have an annual capacity of 3 million tons.

Posco is also working on a $13.8 million, 100,000-ton plant in the southern Dong Nai province which will go stream in June 2008.

Its feedstock will come partly from the Posco’s Ba Ria-Vung Tau province-based steel complex.

The Korean group hopes to develop Vietnam as a gateway to the Southeast Asian market.

Posco expects to secure a frontline production base in the region by pursuing its plan to link its Vietnamese operation to ones in China and India, enabling it to obtain greater global competitiveness in the production and supply of steel-based products.

Source: Dau Tu, Thanh Nien – Compiled by Dong Ha