This would be Tata Steels second largest investment overseas after it acquired UK-based Corus earlier this year. Tata Steels 65% stake in the venture will cost the Indian steel giant around $2.27 billion (Rs 9,300 crore). Tata Steel stock rose marginally by 0.52% on the BSE on Tuesday to close at Rs 629.25.
Tata Steel and VSC will undertake a feasibility study for the steel project. On the completion of the study and financial closure, Tata Steel will have a stake of a minimum of 65% while the remaining stake will be with VSC. The Indian steel major will also a 30% stake in Thach Khe Iron Ore Joint Stock Company, which would undertake mining in the Thach Khe iron ore mine. This is crucial for Tata Steel, because it has become imperative for the company to scout for raw material reserves after its acquisition of Corus.Tata Steel already has a JV with VSC in rolling mills through NatSteel, Asia which is a Singapore based subsidiary of Tata Steel.
The government of Vietnam had mandated VSC to select a foreign partner for the steel project based on the principle that such a foreign partner (who develops the steel project) would be entitled to participate in Thach Khe Iron Ore mining project with an equity contribution of 30%. The government gave its approval to Tata Steel on May 18.