Japan's JFE Steel Corp. said Thursday it will acquire a 5 percent stake in a large-scale Vietnamese steel plant project spearheaded by a Taiwanese steelmaker and will provide the project with technical support.
JFE Steel is the first Japanese steelmaker to participate in an integrated steel project including blast furnaces in Southeast Asia.
JFE Steel will pay about ¥27 billion ($217 million) for the 5 percent stake. It plans to decide on detailed terms for the investment and reach a final agreement by the end of August.
The company has decided on the participation to meet an expected increase in demand for steel products in the future, with demand expanding in Vietnam and automakers having moved production bases to Southeast Asia.
Shinichi Okada, vice president of JFE Steel's parent JFE Holdings Inc., said the move is a part of its medium- and long-term strategy for growth as demand for steel is falling in Japan.
The steel plant will have an annual crude production capacity of 7 million tons.
With JFE Steel's 5 percent stake in the project, Taiwan's Formosa Plastic Group is set to hold a 70 percent stake and Taiwan's China Steel Corp. 25 percent.