Formosa Plastics pledges $27bn
Formosa Plastics pledges $27bn
Taiwan’s Formosa Plastics Group has approved a plan to triple its total investment capital into an integrated steel and port complex in central Vietnam to a massive $27 billion sum.
A Formosa Plastics Group source in Vietnam said the group “has officially decided to increase the total investment capital [at the under-construction integrated steelwork complex in Ha Tinh province’s Vung Ang Economic Zone] to $27 billion” from $9.9 billion registered in its current investment certificate.
Formosa Plastics Group, in a document sent to VIR last week, also confirmed it would increase the total annual production of this steelwork to 22.5 million tonnes of steel from 7.5 million tonnes, putting it on the map as one the world’s largest integrated steelworks.
The steel facility, covering 2,000 hectares of oceanfront land, will comprise six blast furnaces, a 32-berth seaport and a 2,150 megawatt thermal power plant. The construction of this factory will be conducted till 2020.
“In the next few months, we will officially submit this expansion plan to the Vietnamese government for approval,” said the source. “An area of 2,000ha will allow us to increase the facility’s production capacity.”
Formosa Plastics Group, the largest private conglomerate in Taiwan, gained an investment certificate for developing this mammoth integrated steelwork in Ha Tinh five years ago. The construction was delayed till 2010 because of site clearance matters.
The group has completed the construction of office buildings, guest-houses and residential buildings for workers. Other works including a seaport and the first blast furnace are under construction. The first blast furnace will operate in 2015.
The Formosa Plastics Group source said the firm had strong financial ability to develop such a large-scale manufacturing facility in Vietnam.
He said that the group’s mammoth project in Vietnam would not create an oversupply of steel products in the domestic market.
“We do not produce construction steel. Our products are hot-rolled steel that Vietnam still largely depends on imports,” Formosa stated.
The Taiwanese investor estimated Vietnam had to import 3.58 million tonnes of hot-rolled steel in 2011 and the country would need $3.5 billion to import 5.2 million tonnes of hot-rolled steel in 2015.
“Fifty per cent of our products would supply the domestic market, helping save foreign currency for the Vietnamese government while the rest would be exported. In the recent years, because of the strong growth of industrialisation and urbanisation in the Southeast Asian region, the demand for steel has been growing rapidly,” the group said.
Presently, the Southeast Asian nations are reliant on imported steel products from China, Taiwan, Japan and South Korea.
“Our steelwork in Ha Tinh will aim to cover the Southeast Asian market, and enjoy tax incentives from the ASEAN free trade area,” it added.
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