"Demand for steel remains strong in Vietnam, and we have a lot of faith in this investment," Nikkei quoted Hoa Phat chairman Tran Dinh Long as saying about the plant to be built in the central province of Quang Ngai.

The expansion comes as Vietnam accelerates efforts to increase production of key industrial materials as the pandemic and geopolitical tensions highlight the risk of overdependence on Chinese supply.

The new blast furnace will add another 5.6 million tons to its annual capacity, including 4.6 million tons of hot-rolled coil and one million tons of steel bars and wire rods.

Overall, it is expected to expand annual crude steel capacity by 70 percent by 2024 to around 14 million tons.

Hoa Phat’s moves are driven partly by China curtailing steel exports, according to Nikkei.