Monday, 16/01/2012 10:00

Tata Steel shuns relocation offer amid clearance woes

Indian steel giant Tata has turned its nose up at Vietnamese government suggestions of relocating its $5 billion steel project from Vung Ang Economic Zone because of ongoing site clearance headaches.

Tata Steel is looking for a room with a view

Last week, the world’s seventh largest steel-maker officially snubbed a Vietnamese government suggestion that it move its project to Dung Quat Economic Zone in the central Quang Ngai province.

The announcement came after Tata Steel conducted studies looking at the feasibility of building a large-scale steel refinery at the Dung Quat zone.

“It [Tata Steel] said this zone did not meet requirements for its project,” said Le Van Dung, deputy director of Dung Quat Economic Zone Management Authority.

During the visit to India last October, Vietnam’s President Truong Tan Sang asked Tata to look at investing in Dung Quat Economic Zone instead of building their factory in Vung Ang Economic Zone in central Ha Tinh province where the project is crippled by site clearance issues.

“Tata Steel is not considering Dung Quat as a destination for its investments,” Varun Bajaj, head project coordination of Tata Steel in South East Asia region, told VIR.

Bajaj said Tata Steel had resubmitted application for an investment certificate to Vung Ang Economic Zone Management Authority and were “awaiting the necessary approvals.”

The application resubmission underscores Tata Steel’s determination to pursue its investment project in Vung Ang, which is close to South East Asia’s largest iron ore mine Thach Khe.

Tata Steel’s plant, initially proposed in May 2007, will have a production capacity of 4.6 million tonnes per year. The project is jointly invested by Tata Steel, Vietnam Steel Corporation and Vietnam Cement Industries Corporation, and the foreign partner has committed a 65 per cent share.

But, Tata Steel is yet to receive an investment certificate for this project and the investor and Ha Tinh Provincial People’s Committee have thus far failed to reach a specific agreement on site clearance costs for the 725 hectare site.

Under Vietnam’s Investment Law, investors do not have to pay costs for site clearance, but Ha Tinh Provincial People’s Committee said the costs – around $200 million – were beyond the province’s ability. Tata Steel agreed to support the province with part of site clearance costs but the local authorities wanted the investor to cover the whole cost


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