December 21, 2007 -- Japan's Sumitomo Metal Industries Ltd. (TSE:5405) announced Thursday that it will produce steel sheet in Vietnam for use in automobiles and home appliances through a joint venture with China Steel Corp. (TSX:2002), Taiwan's largest steelmaker.

Slated to begin operating in 2011, the joint venture will make cold-rolled, zinc-plated and electromagnetic steel sheet. The plan is to break ground for a factory with an annual production capacity of 1.7 million tons on the outskirts of Ho Chi Minh City in the middle of next year, once the Vietnamese government has granted approval.

The plant will process materials exported from Taiwan and Japan. The total investment is estimated at US$1 billion, or roughly 110 billion yen.

The joint venture's capitalization and the two partners' investment ratios have yet to be finalized, but China Steel will likely put up more than half of the funds and Sumitomo Metal will invest around 30 per cent. Participation by other companies is also being considered.

This will be the first local production in Vietnam by a major Japanese steelmaker. Sumitomo Metal expects steel demand in that country to grow at a double-digit annual pace. The firm aims to supply Japanese manufacturers moving into Vietnam and other Asian countries.

Source: Asia Pulse