CSC urges suspension of Formosa's steel plant project

This article was published by the Taiwan Headlines on May 4, 2006. It reports that Taiwan's China Steel Corp. recently urged the Ministry of Economic Affairs to suspend a big steel plant project launched by the Formosa Plastics Group.

According to China Steel Corp., the construction of new steel plants in Taiwan may bring only limited overall benefits, due to the lack of support from massive steel-consuming industries such as auto-making, shipbuilding and home appliances. Worse, it may result in misallocation of Taiwan's precious resources.

Since the Formosa Plastics Group's steel plant project settled its location in southern Taiwan's Yunlin County in late 2004, this is the first time for the China Steel Corp. to openly oppose the construction of the plant. However, because the steel plant project is a set policy of the government, it is not likely that the construction will be suspended.

According to China Steel Corp., the company is currently constructing a new blast furnace, which will produce flat steel billets to fill the demands of local steel industry. But the Formosa Plastics Group's steel plant will produce hot-rolled steel products and other downstream products, which have to be exported abroad.

According to China Steel Corp., the steel industry is one that features high energy consumption, high water consumption, and high pollution. The benefits of the Formosa Plastics Group's steel plant project for Taiwan is an issue that needs to be further discussed, because it will utilize the nation's precious environmental resources to manufacture products that will be used by foreign counties.

At present, only China and India possess abundant supply of materials and massive domestic market. Most other countries with advanced steel industries have stopped expanding their capacities and switched their focus to upgrading production values.