Tue, Mar 23, 2010 - Page 12 News List

BHP, Rio, Vale to supply iron ore to Formosa’s mill

BLOOMBERG AND AFP , TAIPEI

Formosa Plastics Group (台塑集團), Taiwan’s biggest diversified industrial company, said it intends to buy iron ore from BHP Billiton Ltd, Rio Tinto PLC and Vale SA for a proposed US$8 billion steel factory in Vietnam.

The world’s biggest mining companies would supply a combined 12 million tonnes of iron ore a year to the mill, Lee Chih-tsuen (李志村), a member of Formosa group’s executive board, said by telephone from Taipei yesterday. Production could start in three years, he said.

“We’ve reached initial agreements, without decisions on prices,” Lee said.

Formosa Plastics Group, based in Taipei, is constructing a steel mill in Vietnam that will have an annual capacity of 7.5 million tonnes, Lee said. Another official from Formosa Heavy Industries Corp (台朔重工), a unit of the group, also confirmed that “the group has signed a letter of intent on an annual supply of about 12 million tonnes of iron ore with the three miners.”

“Supply is scheduled to start in 2013, when our Vietnamese steel complex begins operations,” the official said, asking not to be named.

The group will invest NT$280 billion (US$9 billion) to build a steel complex with an initial annual capacity of 7.5 million tonnes in Ha Tinh Province in central Vietnam, he said. The official said construction would begin soon after Vietnamese authorities transfer the land needed for the steel plant, which they have committed to do by the end of next month.

The company is expanding in Vietnam, where it already produces textiles, to cut costs and tap the Southeast Asian market.

Unit Formosa Plastics Corp (台塑) is Taiwan’s biggest maker of polyvinyl chloride for construction and consumer goods. The group controls Formosa Petrochemical Corp (台塑石化), the nation’s only publicly traded oil refiner.

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