VietinBank will grant the Vietnam-China Mineral Resources and Metallurgy Co a loan of $109M to develop an iron and steel factory in the northern mountainous province of Lao Cai.

The first phase will see a capacity of 500kt/y of steel by the end of next year, and after the second phrase from 2012-15, that will rise to 1Mt/y.

The $307M factory will use iron ore from the local Quy Xa mine, Vietnam's second largest iron ore mine with a reserve of 122Mt.

It is expected to contribute $34M to the provincial budget each year while creating thousands of local jobs.

Five new steel plants will open this year, according to the Viet Nam Steel Association (VSA).

The new plants would have a combined annual production capacity of up to 1.7Mt of construction steel and around 250kt of pig iron.