Kobe Steel wins approval for $1 Billion Vietnam plant

Kobe Steel wins approval for $1 Billion Vietnam plant. Kobe Steel Ltd., Japan’s fourth- largest mill, said it won approval from Vietnam’s government to build a $1 billion factory in the Southeast Asian country to meet demand there and in neighboring nations. Construction of the factory in the northern province of Nghe And will probably begin in January, the Kobe, Japan-based company said in a statement. Kobe will set up a wholly owned unit in Vietnam this month to conduct a feasibility study for the project, the statement said. Japanese steelmakers, including Kobe Steel and Nippon Steel Corp., are seeking to enter emerging Asian markets as sales decline at home. Vietnam’s economic growth accelerated 5.8 percent in the first quarter from a year earlier, buoyed by construction, tourism and banking services. The plant will use Kobe’s technology to produce nuggets from low-grade iron ore, providing feedstock for electric-arc furnaces that usually use scrap steel. Vietnam has been looking to make use of its own resources for making the metal, Kobe Steel said. Iron ore from Vietnam’s Thatch He mine, which will be used in the new factory, has a high zinc content and isn’t suitable for blast furnaces. For Kobe Steel, the project will also enable it to procure lower-priced iron ore, at a time when the industry faces rising costs for raw materials. Japanese steelmakers and Vale SA, the world’s largest iron ore producer, reached a tentative agreement for a 90 percent price increase in the quarter started April 1. The factory, scheduled to start production in 2013, will have a capacity to produce 2.4 million metric tons of nuggets, after the secondary phase of construction is completed, Gary Tsuchida, a spokesman for Kobe Steel, said.