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The deal was signed between Delong’s wholly owned subsidiary Delong Steel Singapore Projects Pte Ltd (DSL) and Permsin Steel Works Public Co Ltd, Asia Metal Public Co Ltd and Thai Yuan Metal Public Co Limited.
“The company is of the view that there is a growing demand for hot rolled narrow strip steel products in Thailand and wishes to capitalise on the foregoing through the joint venture,” Delong said in a filing with the Singapore Exchange (SGX).
According to the agreement, DSL will control 55% of the joint venture, while each of the three Thai companies – all of them listed on the Stock Exchange of Thailand – will hold a 15% stake.
Manufacturing ‘and/or’ processing
The plan is to install a “steel manufacturing and/or processing plant” in the Amata City Industrial Estate in Rayong province, in the south of Thailand, or “such other location as may be mutually agreed” upon by the companies.
“The parties shall use their best efforts to complete the establishment of the facility within 18 months from the date of the joint venture agreement,” Delong said.
Products will comprise “ordinary carbon structural steel, high-quality carbon structured steel and low-alloy steel of certain specified specifications”.
Half of the estimated investment totalling 1.4 billion baht ($43 million) will be injected by the four companies while the rest is to be funded by external financing.
Delong also said that each party would now look to obtain approval from their boards to establish the joint venture company.
DSL will have the right to nominate four directors and appoint the chairman of the joint venture’s future board. The three Thai companies will have the right to nominate one director each.
Listed on the SGX, Delong’s operations are located in the Chinese province of Hebei, where it owns a 2.6-million-tpy integrated hot rolled coil plant in Xingtai city and holds an 80% stake in a 1.2-million-tpy billet mill in Laiyuan county.
Permsin Steel, based in Thailand’s Samut Sakhon province, claims to be “one of the biggest distributors of cold rolled coil and sheet” in the kingdom. Its steel service centre comprises slitting and cutting lines, and its products include CRC, HRC, hot-dipped galvanized steel and sheet roofing.
Asia Metal is engaged in the trading and processing of HRC, CRC, bars and pipes. Its facilities are located in Thailand’s Samut Prakan province.
Thai Yuan Metal also operates in the trading and processing of steel. Its products include HRC, bars and pipes and its facilities are located in Samut Sakhon.
Delong Holdings Ltd has entered into a joint venture agreement with three Thai service centres for the installation of a 600,000-tpy hot rolled flat steel mill in Thailand, it announced late on Monday February 24.