Formosa Plastics plans steel mill

Formosa Plastics Group (台塑集團), Taiwan's biggest industrial group, said it plans to spend NT$135 billion (USS$4.3 billion) to build a steel mill as the nation doesn't produce enough of the metal to meet demand.

Production at the plant, which will have an annual capacity of 7.5 million tonnes, may start in 2008, said Lee Chih-tsuen (李志村), the president of Taipei-based Formosa Plastics Corp (台塑), a key member of the group.

"Taiwan is still short of steel," prompting the group to build the mill, Lee said by phone today.

The project comes as steelmakers, including Taiwan's China Steel Corp (中鋼) and Nippon Steel Corp of Japan benefit from a surge in demand from electronics producers, automobile makers and construction companies. China Steel, Taiwan's biggest steel producer, plans to expand annual crude steel production capacity by 500,000 tonnes from 2009, Chen Yuan-cheng (陳源成), China Steel executive vice president, said today.

"We're doing this to increase the capacity of high-quality products," Chen said by phone today.

The line will use crude steel from the company's blast furnaces, which have annual capacity of 11 million tonnes, Chen said. The capacity at the furnaces will increase by 500,000 tonnes from 2009.

Taiwan imports about 10 million tonnes of steel a year, according to China Steel.

Taiwan's recovering property market and public works projects, such as the nation's first high-speed rail, have been pushing up demand for the metal.

Formosa Plastics welcomes China Steel's participation in the group's steel mill project, Lee said, without giving details.

The Ministry of Economic Affairs supports Formosa Plastics Group's plan to build an integrated steel mill in the Yunlin offshore industrial park in southwestern Taiwan, Minister Ho Mei-yueh (何美玥) said yesterday.

Asked about her views on Formosa Plastics' new investment plan, Ho said the ministry has consistently supported the proposed steel mill project because it is important to the development of Taiwan's steel industry.

Under current domestic investment regulations, an environmental impact assessment must be carried out prior to the construction of a steel mill. Ho said the ministry is now preparing for this work for the project.

Formosa Plastics, Taiwan's largest industrial group, includes Formosa Plastics, Formosa Petrochemical Corp (台塑石化), Nanya Plastics Corp (南亞塑膠), Formosa Chemicals & Fiber Corp (台灣化纖) and Nanya Technology Corp (南亞科技).

Formosa Plastics chairman Wang Yung-ching (王永慶) reportedly has already informed senior ministry officials of his group's decision to launch its steel mill project in the Yunlin offshore industrial zone, and has asked for the ministry's support for the project, particularly in land acquisition and environmental impact evaluation.

Since the passage earlier this year of the Kyoto Protocol, industries that produce high levels of emissions, such as the steel and petrochemical industries, are now subject to stricter environmental impact standards, officials at the ministry said, adding that the ministry will do its utmost to assist Formosa Plastics in realizing its investment project.

With the ministry's assistance, Formosa Plastics has managed to secure a 600-hectare plot of land in the industrial park for its new steel mill project. The group has already built a petrochemical complex in the area.