Myanmar courting Thai steel ventures
Move part of efforts to reduce imports
The Myanmar government is wooing Thai steel producers to set up a joint venture to produce hot-rolled coil steel in Bagan, according to the secretary-general of the Iron and Steel Club under the Federation of Thai Industries (FTI), Korrakod Padungjitt.
He said the Myanmar government is building a steel factory in Bagan with total capacity of 400,000 tonnes a year, and is seeking to partner with a Thai steel company interested in expanding in the country.
The construction of the plant is expected to be completed by the end of the year, Mr Korrakod said.
The steel factory is part of the Myanmar government’s policy to reduce steel imports, and will receive a total investment of around 35 billion baht.
The government will gradually transfer state-owned businesses, including the steel industry, to be flexibly operated by private firms, Mr Korrakod added.
“Myanmar has invited many foreign steel companies from Thailand, Japan and South Korea, as the Myanmar government has expectations that foreign expertise will be able to help improve local steelmakers faster,” said Mr Korrakod.
Some FTI members and Thai steelmakers went to observe the plant in Bagan recently but their final decision has yet to be made.
Mr Korrakod said steel production from the new plant is expected to meet the strong domestic demand and would also reduce steel imports from China, Thailand and Vietnam.
Myanmar’s steel consumption stands at 2 million tonnes a year on average and demand is expected to grow by 10% each year in line with the country’s economic growth, which normally pushes demand for steel in real estate and infrastructure construction higher.
Mr Korrakod said the Shan state in Myanmar has a substantial amount of pig iron, an intermediate product of the iron industry, which can be used to produce higher-value cold-rolled steel and coated steel products for auto-related industries in the future.
However, Myanmar will have to develop new gas pipelines to transport natural gas for a new power plant to serve the steel factory there.
“There are some Thai steelmakers that are interested in this steel project in Myanmar. However, they need to look into the investment details further before making any decisions,” he said.
Mr Korrakod said the Myanmar government has three other steel factories that are waiting to be transferred into the private sector.
The overall Asean steel market is expected to grow by an average 4% a year, from around 60 million tonnes.
For Thailand alone, the FTI steel club expects steel demand this year to be around 17 million tonnes.