Kobe Steel, Japan's fourth-largest steel producer, has been licensed to construct a US$1 billion iron production facility in Vietnam, said the company.
The company said the project in Nghe An Province's Hoang Mai Industrial Zone would include four plants to be built in two phrases. The entire facility would have a total capacity of 2.4 million metric tons per year. Iron produced at the plants would be for both import and export.
The company will use its ITmK3 iron-making process to produce iron nuggets from iron ore mined at the Thach Ke mine in central Vietnam's Ha Tinh province, said the company.
It said the mine contains a relatively high amount of iron, but too much zinc, which makes it difficult to use in blast furnaces.
But the ITmK3 process would enable Vietnam to make effective use of its mineral resources, and the use of relatively inexpensive raw materials would help improve the profitability of the project, said the company.
The company said plans for the facilities call for the early establishment of a locally incorporated company through which the project can be carried out and a detailed feasibility study be conducted. The firm said it aimed for the first phase of construction to begin in January 2011.
Vietnam is largely dependent on importing scrap and semi-finished steel products to meet its iron unit requirements.
Last year, the country consumed 5.3 million tons of steel and it forecast the local demand would grow by 10 percent to 5.5 million tons of the product this year, according to the Vietnam Steel Association.