Formosa Plastics Group (FPG, 台塑集團) held a groundbreaking ceremony on Sunday for its steel mill in the Vung Ang Economic Zone in Vietnam, with the mill’s first blast furnace scheduled to be operational by May 2015, the company said in a statement yesterday.
The construction of the project marked FPG’s first business venture in the steel industry, the company said. FPG is one of the nation’s largest diversified industrial companies.
During the first stage of the two-stage construction plan, FPG said it planned to invest US$10 billion into the project and aims to produce 7.07 million tonnes of crude steel and 6.82 tonnes of finished steel every year following its completion.
Under the group’s plan, the steel mill in Vietnam will sell its products to countries in Southeast Asia, where the firm envisages surging demand for steel products because of increasing urbanization.
Currently, there are no large-scale blast furnaces or converters in the region, the group said.
In addition, the production of crude steel in the region is still too low to accommodate demand and as such countries in Southeast Asia have to rely on steel product imports, FPG said.
Furthermore, a plant in Vietnam can enjoy reduced custom tariffs when exporting its products to other ASEAN countries under the bloc’s free trade regulations, FPG said.
The two-stage investment plan is a joint venture between FPG and Taiwan’s China Steel Corp (CSC, 中鋼), which is the nation’s only integrated steelmaker. FPG controls 95 percent of the shares, while CSC has the remaining 5 percent.
The project includes the construction of a steel mill, a power plant and a number of wharfs, and is expected to be completed by 2020.
By 2020, the steel mill will have six blast furnaces capable of producing 22.5 million tonnes of crude steel a year, making it the largest consistently operating steel mill in Southeast Asia.
The harbor will have 32 wharfs with a throughput of 85 million tonnes and the power plant will have the capacity to provide 2,150 megawatts of power, FPG said.
FPG chairman William Wong (王文淵) and Vietnamese Prime Minister Nguyen Tan Dung attended Sunday’s ceremony, which was also joined by Huang Chih-peng (黃志鵬), Taiwan’s representative to Vietnam.