A partnership between Thai manufacturer G Steel Group and Nippon Steel Corporation is expected to enable Thailand to be less dependent on imports, says Witoon Simachokedee, former permanent secretary of the Industry Ministry.
"Thailand will gain enormous benefits from this joint partnership," he said.
The country currently imports hot rolled coil, also known as HRC, to satisfy demand in the manufacturing sector, but with the cooperation between G Steel Group and Nippon Steel, more quality HRC will be produced to serve the domestic market, said Wirote Rotewatanachai, president of the Iron and Steel Institute of Thailand.
Thailand can also export more HRC, including to Nippon Steel's various affiliates and customers in the auto parts industry, which has huge growth potential, he said.
Last year, Nippon Steel, considered one of the "Big 4" steel producers, invested around US$477 million to buy shares of G Steel and GJ Steel, under G Steel Group.
The share purchase agreement includes a shareholder loan and a tender offer.
The move demonstrates Nippon Steel's intention to diversify its strategy in this region and enhance the quality of HRC to serve the domestic market, said Mr Wirote.
Sirivat Voravetvuthikun, a multimillionaire investor with a stake in G Steel and GJ Steel, lauded the significant progress at the two companies under the management of Nippon Steel.
G Steel Group founder Somsak Leeswadtrakul understands the operating environment, said Mr Sirivat.
Mr Somsak brought in a strategic fund investor to help restructure the debts and operations of G Steel Group in the interim, then invited Nippon Steel to be the major shareholder of G Steel.
According to Mr Witoon, the investment combines Nippon Steel's business know-how, professionalism, high-level technology expertise and competitive financial costs with G Steel's integrated HRC manufacturing using the environmentally friendly electric arc furnace (EAF) production system.
EAF technology allows the manu- facturer to bring scrap back to smelt again.
G Steel and GJ Steel operate state-of the-art HRC factories with a combined production capacity of 3 million tonnes.
G Steel and GJ Steel operate state-of the-art hot rolled coil factories with a combined production capacity of 3 million tonnes.
Mr Wirote said government support would greatly enhance the development of the country's steel industry.
While the steel industry faces many challenges and high volatility, there are still opportunities for steel producers with extensive experience and broad networks like Nippon Steel to increase efficiency, allowing the company to successfully compete in the market, he said.
Mr Witoon, currently a freelance writer, is a key supporter of the G Steel Group.
He is familiar with the groups' factories and has high regard for Mr Somsak, especially his long-term vision and in-depth knowledge of the steel industry in Thailand.
Mr Witoon said Mr Somsak's extensive experience, reputation and connections to business networks related to the Thai steel industry should prove beneficial to G Steel Group and help to enhance the development of the Thai steel industry, particularly with further government support.
"It is important that major industry players such as G Steel and GJ Steel continue to coordinate closely with government agencies so that policymakers are informed of developments and impediments encountered by the industry," he said.
Mr Somsak was not available for comment.