China Steel Corp (中鋼), the largest steel maker in Taiwan, said yesterday it was studying the feasibility of taking a stake in a Formosa Plastics Group’s (FPG) investment in Vietnam.
“We are considering the possibility of investing in FPG’s steel plant [to be built] in Vietnam’s Ha Tinh Province,” China Steel executive vice president L.M. Chung (鍾樂民) said. “We are looking into whether and how the investment will boost shareholders’ value and make China Steel more profitable.”
Local media reported earlier yesterday that China Steel might take a stake of up to 10 percent in the plant and that the investment proposal would be submitted to the China Steel board of directors for approval later this month, adding that the investment was likely to be finalized by the end of this year at the earliest.
Media said the investment was expected to help both sides in terms of product development and technology exchanges.
However, Chung declined to disclose the actual size of the stake it was eyeing in the FPG plant, which would be capitalized at US$2.7 billion with a total investment of about US$80 billion.
FPG has secured approval from Vietnamese authorities to build the Vietnam steel complex with annual production capacity of 7.5 million tonnes in the first phase of development.
News reports said China Steel wants to further strengthen its business ties with FPG, as the petrochemical conglomerate has taken a 5 percent stake in China Steel’s US$600 million cold-rolled steel plant that will be built near Ho Chi Minh City.
Chung said the ties with FPG weigh on the investment consideration to some extent, but reiterated that any investment has to be profitable for China Steel.
China Steel obtained the green light from Vietnam earlier this year to build the steel plant and the company is aiming to complete construction by the end of 2012.
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