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Formosa Plastics begins building Vietnam steel mill

Formosa Plastics Corp (台塑) has broken ground on a steel mill in Vietnam, which will become the world’s sixth-largest when it launches full-scale operations, the Chinese-language Economic Daily News said yesterday.

Formosa Plastics, Taiwan’s largest petrochemical manufacturing conglomerate, held a ground-breaking ceremony for the steel mill on Sunday in Ha Tinh Province, 340km south of Hanoi, the paper reported.

The complex will be run by Formosa Heavy Industry and Cayman island-registered Sun Steel Corp (Sunsco), the Vietnam Economic Times said. Formosa holds 95 percent of the project, while Sunsco holds 5 percent, the paper said.

The steel mill is the biggest single foreign investment in Vietnam and accounts for half of the country’s inbound investment this year, making Formosa Plastics the nation’s top foreign investor.

About 1,000 Vietnamese, including Vietnamese Prime Minister Nguyen Tan Dung and several officials, attended the ceremony.

The mill will be built in three stages. When the first stage, costing US$8 billion, is finished later this year, the plant will produce 6.8 million tonnes of steel annually, the paper quoted Formosa Plastics chairman Wang Wen-yuan (王文淵) as saying.

In the second stage, the output will double and in the third stage, expected to be finished in 2011, the annual output will reach 27.2 million tonnes, making it Asia’s second-largest, and the world’s sixth-largest steel project.

The Vietnamese government said on its Web site that the plant will import iron ore for its operation and will eventually also use iron ore from Thach Khe mine in Ha Tinh Province. The mine has an estimated reserve of 490 million tonnes of iron ore.

Wang said a deep-water port will be built on the Ha Tinh coast so that his company can ship steel-making equipment to Vietnam.

The steel mill will need 40,000 to 50,000 workers, and it may hire workers from China, Laos and Cambodia, as Ha Tinh has a small population.

At Sunday’s ceremony, Dung invited Formosa Plastics to also build a petrochemical complex. Wang said his firm was willing to carry out a feasibility study, provided that Vietnam fully liberalizes its policies on crude oil and crude products.
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