JFE postpones decision on integrated mill project in Vietnam

JFE Holdings will delay the decision on whether to proceed with the construction of a $3.65-billion integrated steel mill in Vietnam.

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Japan’s second-largest steel producer had initially said that it would confirm the building of its first overseas integrated steel mill by the end of the year.

But now the company says it needs more time to assess competitive risks as heavy investment in new mills in Vietnam and China threatens to produce a supply glut.

As a result, the decision on whether to go ahead with an environmental assessment study for the project has now been pushed back until the end of the financial year in March, JFE Steel said.

It also said that it would look at ways to reduce the project’s final price-tag, currently estimated at Y300 billion ($3.63 billion) as it seeks to reduce its investment costs amid weak earnings.

JFE signed a memorandum of understanding with Taiwan’s E United Group in March to study the feasibility of building and launching a 3.5 million-tpy steelworks by 2016. The plant would produce mainly steel sheets, and JFE Steel would be the majority shareholder.

JFE said that it chose to partner with E United Group as the Taiwanese company already has a construction site for a steelworks in the Dung Quat Economic Zone of Vietnam’s Quang Ngai Province.

JFE is also in talks with Vietnam’s central and local government to secure infrastructure, including port, water and electricity supply to operate the works.