JFE Steel mulling over role in Formosa’s Vietnam steel project

A proposal from Taiwan’s Formosa Plastics Group to join it in the management of a large steelworks in Vietnam may see Japan-based JFE Steel returning to invest in the Southeast Asian country.

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A spokesman for JFE Steel confirmed to Steel First late on Tuesday November 18 that the Taiwanese industrial conglomerate has offered it a role in Formosa Ha Tinh Steel Corp, its integrated steelworks in Vietnam.

The proposal is being reviewed, though nothing has firmed up yet, he said.

According to media reports, Formosa made the approach to JFE Steel, with which it already had business dealings as a recipient of stainless steel technology.

“We have started to discuss if we are going to take part in the project or not,” the spokesman said. “At this point, we have not reached any conclusion yet.”

In September, JFE Steel pulled out of a scheme to build a new steelworks in Vietnam with Taiwan’s E United Group after deciding the project would not be economically viable because of steel overcapacity in the region. JFE Steel joined the project in 2012 and had been conducting a feasibility study for a plant that was to have been built in Vietnam’s central province of Quang Ngai.

Even though it abandoned that idea, the company has not ruled out the possibility of investing in an integrated steel plant overseas, the spokesman said.

“We are aware of the need for medium- and long-term overseas integrated steelworks, so we will continue to consider overseas integrated steelworks in the future,” he said.

Formosa’s integrated steelworks project in Vietnam, the biggest greenfield project in the region, is the most significant one that has yet to come on stream, according to the South East Asia Iron & Steel Institute.

Due to construction delays linked largely to anti-China riots in May, its first blast furnace – with 3.5 million tonnes of projected annual production capacity – is estimated to be ready for commissioning by the end of 2015 at the earliest.

Formosa plans to eventually increase the facility’s crude steel output to 22.5 million tpy by 2020.