Calcutta, Oct. 31: Tata Steel today signed an agreement with the Vietnam Steel Corporation to set up a cold rolling mill in that country.

The Tata group company, which has become the world’s sixth largest steel maker after buying Anglo-Dutch Corus, will hold a 65 per cent stake in the project, while Vietnam Steel will own the rest.

The companies will undertake a joint feasibility study to ascertain the capacity and investment in the project.

A memorandum of understanding was signed in Hanoi today by Hemant Nerurkar, the newly appointed chief operating officer (steel) of Tata Steel, and Dau Van Hung, president of Vietnam Steel.

Senior government officials of Vietnam, Indian ambassador to Vietnam Lal T Muana, Vietnam Steel chairman Mai Van Tinh and Indronil Sengupta, chief executive (South East Asia projects), Tata Steel, were also present.

Tata Steel and Vietnam Steel are now carrying out a feasibility study for a steel project in Vietnam’s Ha Tinh province for which an MoU was signed on May 29. The Ha Tinh project includes a 4.5-million-tonne integrated steel plant and the development of Thach Khe iron ore mine at an estimated investment of $3.5 billion.

Established in 1995 by the merger of Vietnam Metal Corporation and Steel Corporation, Vietnam Steel has partnered various foreign players in steel manufacturing.

The total capacity of Vietnam Steel, including its joint ventures, is around 5mt.

Tata Steel now has a 26mt capacity following the Corus deal in January. It hopes to double production by 2015 with three greenfield projects in Orissa, Jharkhand and Chhattisgarh and expansion of its existing Jamshedpur plant. It is also pursuing new projects in Iran, Bangladesh and Egypt.

Vietnam, with a GDP growth of over 8 per cent and per capita steel consumption of over 85kg, is on the threshold of a significant increase in consumption, including value-added steel. The Tatas have identified this South Asian country as one of the major places for expansion.