Formosa Plastics Group, Taiwan's largest petrochemical manufacturing conglomerate, has begun construction of a steel mill in Vietnam that represents the group's biggest single overseas investment. FPG held a groundbreaking ceremony for the Son Duong Iron Steel and Port Complex recently in Ha Tinh, 340 kilometers south of the Vietnamese capital, Hanoi. Formosa Heavy Industry Corp., one of the group's subsidiaries, and Cayman Island-registered Sun Steel Corp. (Sunsco) will operate the complex. FPG holds a 95-percent share in the project, while Sunsco holds 5 percent, an FPG spokesman said. At the ceremony, FPG Chairman Wang Wen-yuan said that the complex would be built in two stages at a cost of US$7.26 billion and US$8.29 billion respectively. The complex will consist of an iron and steel mill capable of producing 7.5 million tons per year and a deep-water port with a capacity of 30 million tons. In the second stage, the mill will be upgraded to attain an output of 15 million tons per year. It will produce products such as steel embryo and hot-rolled steel plates. Vietnamese Premier Nguyen Tan Dung attended the groundbreaking ceremony and used the opportunity to invite FPG to construct a petrochemical complex in his country. In response, representatives from the group said they would consider such a project once the Vietnamese government had relaxed policies related to the sector. The Vietnamese government said on its Web site that the Son Duong project, the biggest foreign direct investment in the Southeast Asian country, was expected to lead to vigorous development of the Vung Ang Economic Zone, helping to grow the economy of Ha Tinh and the country's entire central region. Ha Tinh would become a large-scale industrial and service city, the government added. According to Vietnamese officials, the plant will initially rely on imported iron ore for its operations. Later, iron ore will also be sourced from Thach Khe Mine in the Ha Tinh Province. The mine has estimated reserves of 490 million tons of iron ore. The complex will create 10,000 jobs initially and will later require between 40,000 and 50,000 workers. Some of these workers will be recruited from China, Laos and Cambodia because the workforce in Ha Tinh is small. Wang said the deep-water port on the Ha Tinh coast would be able to receive 200,000- to 300,000-ton ships, making it possible for steel-making equipment to be shipped to the Vietnamese industrial complex. The FPG chairman said investments made through subsidiary Formosa Taffeta Co. Ltd., a textile-manufacturing company, have amounted to US$1.4 billion since 1999. According to statistics compiled by the Vietnamese government, Taiwanese companies invested a total of US$11 billion between 1988 and April 2008, making Taiwan the third-biggest foreign investor in Vietnam. Wang said FPG had decided to increase its investments in Vietnam after reviewing the potential of the country, which is a member of the Association of Southeast Asian Nations. “Steel production is a new business for FPG, and this industry is also considered vital to the development of a country. I believe that the steel plant will make a contribution to Vietnam's infrastructure,” Wang said. The chairman also pointed out that there was little scope for FPG to expand its interests in the domestic petrochemical products market. If the group was to develop further, he explained, it would need to exploit new businesses and markets. “The steel mill in Vietnam is of great importance to us,” he said. FPG also has plans to build a steel mill in central Taiwan's Yunlin County. However, the project would need to be approved by the Cabinet-level Environmental Protection Administration. The group is hopeful that the scheme will pass an environmental-impact assessment conducted by a committee organized by the EPA.
