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Formosa still seeking partners in steel plant project

Released at: 11:14, 03/08/2017

Formosa still seeking partners in steel plant project

Formosa mega steel plant in Ha Tinh province. Source: Internet

Partners sought to jointly invest in improvements to and expansion of mega steel plant in Vietnam.

by Quang Huy

The Taiwan-based industry conglomerate the Formosa Plastics Group (FPG) said this week it is still in the process of finding partners to jointly invest in improvements to and the expansion of its mega steel plant in Vietnam, which reopened earlier this year after months of inactivity due to a toxic waste spill last year.

Following the environmental disaster, FPG pledged to invest $1 billion in two stages to bring total investment to $11.6 billion, aimed at improving environmental safety and increasing capacity at the Formosa Ha Tinh Steel Corp. (FHS) in the Vung Ang Economic Zone in the north-central province of Ha Tinh.

The first phase of the project was completed in late July by FPG and its major subsidiaries, while another $500 million will be put into the project in the second phase, by issuing new shares, FPG said.

The group, however, is still seeking new partners for the second phase of the project and has not yet decided on any suitors.

Taiwan’s Commercial Times newswire reported on August 1 that FPG, the major shareholder in the steel plant, had invited budget carrier Vietjet Air to invest in the second phase of the project by taking on a 4-5 per cent stake in the plant.

The inclusion of Vietjet would help build closer business ties between Taiwan and Vietnam and allow FPG to put down roots in the Vietnamese market and penetrate the ten-nation ASEAN bloc, the report said, citing unnamed sources at Formosa Ha Tinh Steel.

However, Vietjet’s CEO refuted the news, saying that the carrier does not invest in non-core business lines. “This information is incorrect and groundless. Vietjet’s strategy is to focus on aviation,” Mr. Luu Duc Khanh told local media.

The China Steel Corp., the largest steel maker in Taiwan, and Japan’s JFE Steel Corp. also hold stakes in the Vietnamese steel mill, as do FPG’s four subsidiaries.

By the end of this year or early 2018, total production capacity at the plant is expected to reach about 7 million tons per year, making it the largest steel mill in Southeast Asia.

In April 2016, a toxic waste leak at the steel mill caused pollution along some 200 km of Vietnam’s coastline, with tons of marine species washing ashore and thousands of local workers becoming jobless.

After a lengthy investigation by the Vietnamese Government, which found FPG responsible for the incident, it made a public apology and paid $500 million in compensation. The plant was closed until May this year after fixing almost all its faults and upgrading its waste treatment system.

At a July 24 meeting with FHS, Prime Minister Nguyen Xuan Phuc firmly reiterated the government’s determination to safeguard the environment, saying the steel mill would close immediately if another toxic spill was to occur.

He asked FHS to apply advanced technologies and modern equipment in its production line in order to fully address any violations in terms of both machinery and social responsibility. “No operations are allowed if they are unsafe,” the Prime Minister said. “I want to make it clear that if any violations reoccur, the mill will be shut down.”

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