Vietnam’s Pomina Steel Corp. is in discussions with Japan’s Nansei Steel to sell the former’s Pomina Steel 2 in Ba Ria in Vung Tau province for about $20.8 million, sources close to the Vietnamese steelmaker said.

If the sale is concluded, Nansei Steel will hold a 51% majority of Pomina 2’s shares, while Pomina 1 and 3 would remain with Pomina Steel Corp, the sources said.

Pomina Steel 2 comprises of an electric arc furnace with a 500,000 mt/year crude steel production capacity and a 500,000 mt/year rolling mill for rebar.

The buying intention comes after talks for Nansei to buy a 20.04% stake in Pomina Steel were suspended early 2024, Pomina Steel said Jan. 26.

Buying just the EAF and re-rolling facility of Pomina 2 “makes more sense,” a source said, as Nansei is a ferrous scrap supplier and will be able to “provide the scrap and funding.”

Pomina Steel Corp operates Pomina Steel 1, which is a rolling mill with the production capacity of 600,000 mt/year of wire rod and rebar. Pomina Steel 3 comprises a blast furnace and EAF and can produce 1 million mt/year of mainly billets.

Pomina Steel and Nansei Steel did not respond to S&P Global Commodity Insights’ queries for comments on the discussions to buy Pomina 2.

However, the sources said the deadline for buying Pomina Steel 2 is about two years and Nansei will acquire the plant in July 2026.

Prior to the plant purchase, for two years starting July 2024, Nansei will be in charge of contract production and pay an annual processing fee, according to the source close to the steelmaker.

The sale would not affect scrap prices significantly, one Vietnamese trader said, adding, “[The] effect is limited as Pomina didn’t buy [Japanese scrap] this year due to strong pressures from cheap seaborne billets.”

Platts, part of Commodity Insights, assessed the daily heavy melting 1/2 80:20 CFR Taiwan containerized scrap price down $1/ mt on the day and up $3/mt month on month at $348/mt July 30.