Sherpa Hossainy's Blog

JFE Forms Steel JV with Construction Ministry

Posted in Myanmar, Yangon by Sherpa Hossainy on August 24, 2014

10,000-tonne steel bridge fabrication plant to be built in Yangon

Published in Myanmar Business Today (Vol 1, Issue 47) on Dec 23, 2013

Toru Hanai/Reuters

Japanese steel giant JFE Engineering Corp has established a joint venture company with the Ministry of Construction in a bid to tap Myanmar’s booming infrastructure construction market, the company said.

The new company, J&M Steel Solutions Co Ltd, has started the construction of a 16-acre new plant in Yangon, JFE said in a statement.

J&M plans to complete the construction of the steel structure fabrication plant, with an annual capacity of 10,000 tonnes in Thaketa township, Yangon, by April 2014, to start its business related to steel bridge design, fabrication and construction, the company said.

In addition to steel bridges, the plant will be capable of making harbour and coastal structures and container cranes, JFE said. The company said it will introduce its high quality fabrication technologies to the plant.

The joint venture company will gradually expand the scope of its business to general transportation and logistics infrastructure development, the Tokyo-based company said.

Several international construction companies have been wooing Myanmar to make headway into the Southeast Asian nation’s lucrative construction market as it emerges from decades-long isolation and military dictatorship, which left the country direly requiring construction of transportation infrastructure, such as roads and railways, as well as logistics infrastructure, including port terminals.

With J&M receiving orders for projects within Myanmar, the ministry of construction aims to increase the ratio of domestically fabricated steel structures from its current level of about 10 percent.

JFE said it will leverage the joint venture company not only to receive direct project orders, but also as a  production base for the expansion of its overseas steel structure business in Southeast Asia, Middle East and Africa.

The company will offer its engineering expertise to the environmental and energy fields, in addition to the country’s transportation and logistics infrastructure.

The establishment of the joint venture was agreed to between JFE Engineering and the Public Works department under the ministry in February. Procedures for the establishment have since been carried out, and a business licence was granted in November.

The share capital of the JV company is ¥1.2 billion ($11.68 million), where JFE Engineering Corp holds 60 percent stake while the Public Works department holds the rest.

The company will start with 80-90 employees (about 70 workers) and will increase its human resources up to 210 employees (30 staff and 180 workers) by April 2014.

JFE Engineering opened its Yangon Branch in 1995 which provides technical support to national companies regarding the construction of large bridges. It has been accepting over 200 welding trainees at its Tsu Works since 2002.

It also started an internship training program for students of the Yangon Technological University this year to train future infrastructure construction professionals.

JFE Holdings, the parent company of JFE Engineering, was formed in 2002 by the merger of NKK and Kawasaki Steel Corp. At the time, NKK Corp was Japan’s second largest steelmaker and Kawasaki Steel was the third largest steelmaker.

JFE Holding’s main business is steel production. It also engages in engineering, ship building  and real estate redevelopment. JFE Holdings is the fifth largest steel maker in the world with revenue in excess of $30 billion. JFE Holdings has several subsidiaries including JFE Engineering, JFE Steel and JFE Shoji.

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