FPC sees glimpse of light in building of steel mill

Taipei, Aug. 27, 2003 (CENS)--In response to an application by Formosa Plastics Corp. (FPC) to build a large-sized steel mill in the Tacheng offshore zone, Changhua County, the central government is said to have promised to help the petrochemical conglomerate carried out the investment project.

The government will revise regulations governing the development and management of reclaimed offshore lands.

Current regulations stipulate that firms using reclaimed offshore lands must reserve 30% of the developed land to build public facilities and donate another 30% to the government. But FPC disagrees with the donation ratio and has called for the government to revise the regulations.

Under existing regulations, FPC will be able to use only 400 hectares for a production facility if it completes the development of its 1,000-hectare reclaimed-land project in Changhua county's Tacheng offshore area.

FPC said if the government can help it obtain the reclaimed offshore land, it will step by step materialize its plan to build the large-sized steel mill in Changhua County.

Although there is a rumor that FPC will cooperate with the China Steel Corp. to jointly build the proposed steel mill, FPC chairman Y.C. Wang has denied such rumor. But Wang said he will give warm welcome to CSC chairman Lin Wen-yuan if he wants to cooperate with FPC in any possible cooperative projects.

CSC's Lin said his company has never thought of cooperation with FPC in building a large-sized steel mill in Tacheng offshore area. He still has no plan to meet with FPC executives in talking about the cooperation of building the steel mill in Changhua County in the foreseeable future.

"I don't rule out the possibility of cooperating with FPC in any projects," Lin noted. "For instance, we will be happy to sell steel materials to FPC if it wants to build a plant for the production of steel plates for automobiles. But at this moment, we don't have any contact with FPC to talk about collaboratively building any steel mill in Taiwan."

Lin said his company is really considering launching another round of cooperation with Sumitomo Metal Industries Ltd. Of Japan after it formed a joint-venture firm, East Asia Union Steel Corp. (EAU Steel), in Tokyo in May. Currently EAU holds a 100% stake in Upspream Company (UPCO), a steel affiliate of Sumitomo Metal, which specializes in the production of steel billets.

The venture is the largest cooperation project to date between Taiwan and Japanese steel firms. According to a contract between CSC and Sumitomo Steel, EAU Steel has to supply at least 1.8 million steel billets per year to CSC and its affiliate Yieh Loong Steel Corp. The supply of steel billets is expected to help resolve the shortage of raw materials faced by steel firms in Taiwan.

This is the second cooperative venture between CSC and a well-known Japanese steel firm. The Taiwan steel maker previously allied with Maruichi Steel Tube Ltd. CSC said that the cooperative venture with the two Japanese firms would help stabilize the domestic iron and steel market, which has been volatile over the past several months.

Lin firmly said the venture has created in a win-win-win situation for CSC, Yieh Loong and Sumitomo. "Because of the successful cooperation project with the Japanese steel manufacturer, we have strong interest in launching further cooperative projects with Sumitomo in the near future," Lin said.