Formosa denies plans to build foundry in China

Formosa Plastics Corp (台塑) chairman Wang Yung-ching (王永慶) denied he plans to invest US$5 billion in a steel mill venture in eastern China.

The news contradicts reports in the Chinese-language media citing high-level officials from Formosa as having confirmed that the group is planning to develop a giant steel plant in Qingdao, China.

According to the report, Formosa will become a partner with state-owned Qingdao Iron & Steel Group (青島鋼鐵控股集團) for the Shandong Province venture, the 21st Century Business reported on March 15, citing an unidentified Chinese official.

The planned steel plant -- estimated to cost Formosa US$5 billion, making it the largest investment project with capital from abroad in Qingdao's history -- is aimed mainly at supplying steel for Formosa Automobiles Corp (台塑汽車), which has plans to relocate part of its manufacturing operations to China, a corporate source said yesterday.

The Qingdao steel plant would be part of the "Formosa business map" that has been on Wang's mind for a long time, a Formosa official who preferred not to be named said.

The steel plant would be the last piece of the Formosa business map, which includes petrochemical, electronics, high-technology and automobile operations, plus aviation and maritime fleets, the official said.

Unconfirmed sources from China reported Sunday that the Formosa Plastics Group is planning to invest US$5 billion over the next 10 years to build a steel plant in Jiaonan City, Shandong Province.

The steel plant, which is estimated to cost US$6 billion, will include an investment of US$1 billion from the Qingdao Iron & Steel Group. The plant is projected to have an annual capacity of 10 million tonnes of various steel products, with after-tax profits amounting to US$1.1 billion a year, according to the reports from Beijing.

The steel plant is expected to supply China's household electrical appliance, shipbuilding, auto and construction industries