The Songsan-Vinashin joint venture – between Vietnam's Vinashin and Korea’s Songsan – will build the steel mill on a 22.26ha-site in Vinashin-Shinec Shipbuilding Industrial Park (SIP) with the capacity to produce 102,720 tons of steel annually.
The project is scheduled to begin in October and open in December 2009.
The mill would produce steel structures for shipbuilding yards, including Vinashin’s, to replace imported products for use in the domestic industry.
Vinashin, formally known as Vietnam National Shipbuilding Corporation, will shoulder 51 percent of the funds and rely on Songsan for the remainder.
The still mill in the port city is the second steel project by the Songsan-Vinashin venture, which is building a $35 million factory in the neighboring Hai Duong province.
The steel mill is set to come on stream in the second quarter of 2008.
The ship maker wants 60 percent of its steel to be sourced locally by 2010.
Currently, only 30-40 percent of the company's steel is produced locally.
Vinashin said it needs VND40 trillion ($2.5 billion) to reach $1-billion in ship exports by 2010.
Formed last year and run by Vinashin's Shinec affiliate, the Shipbuilding Industrial Park (SIP) has attracted several major projects, including a joint venture between Vinashin and Finland's Mac Gregor group as well as a $100 million project by the Swedish company IKEA.
The park will be home to a $12-million car assembly factory, thanks to a joint venture between the German automaker Volkswagen and Shinec.
A 15-ha wharf able to receive freighters of up to 6,500 tons will also be built at the park as well as offices, a trade center and a luxury apartment complex.
The park offers many incentives, including low land rent rates for investors who sign land lease contracts before December 2007 as well as assistance for customers in workforce training and other fields.