Formosa steel firm puts off operation in Vietnam amid mass fish deaths

By Focus Taiwan   June 16, 2016 | 10:36 am GMT+7

The Formosa Plastics Group (FPG), one of Taiwan's leading conglomerates, confirmed Wednesday that a scheduled operating date for its steel mill in Vietnam has been postponed and said that no new schedule has been set.

Chang Fu-ning, vice president of Formosa Ha Tinh Steel Corp., said that the No. 1 furnace of the steel complex, which is located in the Vung Ang Economic Zone in Ha Tinh Province, central Vietnam, will not become operational on June 25 as scheduled.

The confirmation came after a Taiwanese media reported that FPG has been forced to postpone the start of operations of the furnace in the steel mill, as the Vietnamese authorities have demanded that the group pay $70 million in taxes it has been accused of having failed to pay.

In addition, the media report said that the delay was also because the Vietnamese authorities needed more time to process an application filed by FPG to kick off production.

Chang said that FPG has communicated with Vietnam's Ministry of Finance over the accusation of failure to pay tax and that the management of the Ha Tinh steel mill has been in discussions to iron out a strategy to deal with the delay.

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Giant Taiwanese conglomerate, Formosa Ha Tinh Steel Corp., that appears to be at the center of an investigation into an environmental catastrophe that has seen thousands of tons of dead fish wash ashore in Vietnam's central provinces. Photo by AFP

The media report cited sources in Vietnam as saying that the postponement could deal a blow to the Taiwanese government's new southbound policy, which is aimed at building closer ties with more business partners in the region, including an ambition to turn the Association of Southeast Asian Nations (ASEAN) into an extension of Taiwan's domestic market.

The sources said that the postponement of operations has caught many investors operating in Vietnam off-guard, and hoping that the Taiwan government will step in to resolve the issue.

Formosa has recently come under heavy public criticism after tons of dead fish washed up the shore of central Vietnam last April. A few days before the mass fish deaths, the company had allegedly flushed the pipe for cleaning. About 300 tons of imported chemicals that the company used are believed to be extremely hazardous.

On April 21, Formosa Co. Ltd. denied responsibility for the mass fish deaths while Deputy Minister of Natural Resources and Environment Vo Tuan Nhan said at a press conference on April 27: “Our test results indicate there is no evidence to conclude that Formosa in Ha Tinh province is behind the mass fish deaths. The environmental indicators do not exceed the regulatory threshold.”

However, on May 8, Prime Minister Nguyen Xuan Phuc ordered wastewater from Taiwan's Formosa steel project to be monitored. 

The final conclusion on the cause of mass fish deaths is expected to be announced within this month. Meanwhile, PM Phuc said on June 9 that Vietnam should criminalize "discharge of pollutants [in such quantities and concentration] that cause serious damage to the country."

The $10 billion Formosa Ha Tinh Steel is the first steel furnace investment project by Taiwan in an overseas market.

Currently, FPG's subsidiaries, such as Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fiber Corp. and Formosa Petrochemical Corp., hold a 70 percent stake in the Vietnamese project.

China Steel Corp., the largest steel maker in Taiwan, and Japan's JFE Steel Corp., own a 20 percent and a 5 percent stake, respectively. 

Construction of the Ha Tinh complex started in December 2013. In addition to the steel production facility, the project will include port and power plant construction, scheduled to be completed by the end of 2020.

Related news:

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> Government: no evidence links Taiwanese Formosa firm to mass fish deaths

> Formosa tries to justify mass fish deaths in central Vietnam