Kobe Steel Establishes Direct-Reduced Iron Plant in Vietnam

Kobe Steel announced on Friday the firm acquired an investment license to construct direct-reduced iron plant, ITmk3 with the annual production capacity at 2.4 million tonnes in Vietnam with about 100 billion yen of investment. The firm will carry out feasibility study through the local subsidiary within this year and start the construction in January 2011. The firm plans to start the operation of 2 plants at 1.2 million tonnes per annum as the first phase as soon as in 2013. Kobe Steel builds up the supply network of high quality iron sources by utilizing Vietnamese iron ore and coal.

Kobe Steel established a 100% local subsidiary, Kobelco Iron Nugget Vietnam in April with US$ 9.8 million of capital fund. The subsidiary covers feasibility study and related applications for the project. After the feasibility study, Kobe Steel will construct 4 plants in North are of Vietnam, each of which has a capacity at 600,000 million tonnes per year. The plants will produce iron nugget to be sold to Vietnamese and overseas markets.

Kobe Steel examines to entertain the business form into a joint venture with local partners. The plants will become the supply base of iron sources at the first phase while may grow up to the steel works by addition of the downstream processes at the second phase.

Vietnam depends on imported iron sources, semi-finished steels or ferrous scrap. The domestic industries expect for Kobe Steel’ project. ITmk3 plants uses iron ore produced at Thach Khe iron ore mine in central Vietnam. As the iron ore contains a high amount of zinc (about 0.07%), it is difficult to use in blast furnaces.