Vietnam, India's Essar Group in $527 Million Steel Mill Venture

State-run Vietnam Steel Corporation (VSC) and India's Essar group will establish a $527-million joint venture to build a hot-rolled steel mill, a Vietnamese official said on Monday.

"The company will be a share-holding entity with Essar as one of the founding shareholders," the official in VSC's investment department told Reuters.

VSC, Vietnam's largest steel producer, and Vietnamese rubber group Geruco would sign a contract with Essar later in the day to establish the company in which Essar would hold a majority 65% stake. VSC would hold 20% and Geruco the remaining 15% to the company that will operate the mill to produce 2 million tons of steel sheets a year, the official at told Reuters.

The mill, to be built in the southern province of Ba Ria-Vung Tau and completed in 2009, would use billets imported from India, the Planning and Investment Ministry-run Dau Tu newspaper said.

Essar, a diversified, family-owned holding company, has business interests from telecoms to construction. It also plans three steel plants in the Middle East, including a 1.5 million ton a year steel plant in Iran.

Geruco, the short name for Vietnam General Rubber Corporation, is the country's largest rubber producer. It has been diversifying, investing in hydro-power plants, wood processing and cement production. On Saturday, it signed a deal to become a major shareholder in the partly
private Saigon Hanoi Bank.

Vietnam relies on the imports of steel and billets, mainly from China. Last year, its imports of the products edged up 1.8% from 2005 to 5.62 million tons, government figures show.