Formosa Plastics Group (FPG, 台塑集團), the nation’s largest industrial conglomerate, yesterday said that the operation of the first furnace at its Formosa Ha Tinh Steel Corp (台塑河靜鋼廠) unit in Vietnam would be delayed by one to two months until June or July next year because of a riot initiated by striking Vietnamese workers employed by its subcontractors.
The group spent about US$10 billion to build two furnaces in Ha Tinh Province, Vietnam, with each capable of making about 350 million tonnes of steel a year, Formosa Ha Tinh Steel Corp chairman Lin Hsin-i (林信義) told reporters in Taipei.
The construction of the second furnace, which is expected to be completed in May 2016, would not be affected, Lin said.
Lin said the group will not curtail or terminate the project because it has already spent about US$6 billion and signed contracts with its partners concerning another US$4 billion of the project.
On Wednesday last week, Vietnamese workers employed by Formosa Ha Tinh Steel’s Chinese subcontractors went on strike. They then demolished and burned temporary offices and cargo belonging to the steel company, Lin said.
During the unrest, one Chinese worker hired by a subcontractor was beaten to death, while another died from hyperthermia, Lin said.
Meanwhile, the residential area for Chinese workers outside the steel mill was set aflame by Vietnamese protesters. Local police are still identifying two bodies found at that scene, Lin said.
About 150 to 160 people were hurt in the chaos, with 16 severely injured, Lin said.
Formosa Ha Tinh Steel has 900 employees from Taiwan and 4,000 locally hired workers, but the company’s local employees did not participate in the strike, Lin said.
“We will demand compensation for our losses,” Lin said, adding that the company will also ask the Vietnamese government to offer more benefits for investors, such as tax cuts.
Lin said he plans to go to Vietnam to meet the country’s prime minister or deputy prime minister in the coming days.
The company’s preliminary estimates indicate losses of US$3 million from the latest unrest, Formosa Ha Tinh Steel president Yang Hung-chi (楊鴻志) said.
While China yesterday dispatched three ships to evacuate 3,000 Chinese workers at the steel mill, there is no imminent danger to employees at the factory, with some subcontractors resuming their work, Yang said.
Ha Tinh official Dang Quoc Khanh said via a teleconference that local police have deployed about 1,000 officers to patrol 24 hours a day at the steel mill and guard its three site entrances.
He said the safety measures are not to be lifted until the end of the month.
Steel demand amounted to 55 million tonnes last year in Southeast Asia, Lin said, adding that the figure is expected rise to more than 80 million in 2020.
Southeast Asia imported 40 million tonnes of steel last year, and the group plans to replace imported steel products with those they make in Vietnam in the future, Lin said.
The company’s products may generate cheaper freight costs and might receive lower tariffs, he added.
Regional steel production rose by 3 million tonnes a year after Krakatau POSCO’s joint-venture factory in Indonesia started running at the start of this year, Lin said, adding that there will be no additional capacity increases until Formosa Ha Tinh Steel’s two furnaces become operational.