Formosa Ha Tinh Steel Complex may need $10b

Representative of Formosa Ha Tinh Cast Iron and Steel Complex project has announced that the project perhaps would be officially put into operation in May 2015, instead of 2014 as planned, due to some changes in designing works.

At present, the investors have finished ground levelling works for 961 hectares out of total area of 1,966 hectares.

However, at present, Formosa has faced difficulty in raising capital for this project. Initially, the total investment capital for this project was posted at $8.9 billion, including the construction works for Son Duong deep-water port. However, up to now, the investment capital may reach to about $10 billion. Apart from ownership capital of $3 billion, the company would have to borrow $3 billion from foreign banks and $3 billion dong from the branches of foreign banks in Vietnam. However, the branches of foreign banks in Vietnam would not allow offering loans that surpass over 15 percent of their registered capital for clients, and $3 billion loan was such a large amount.

Another difficulty for that project was the water-supplying sources for the project. Formosa has expected in the implementation progress of Rao Tro Water Reservoir project that was started in January 2012. However, the investor showed concern about the completion of that project at the time the steel mill is officially put into operation.

In the first phase of the project, the steel mill would need about 174,000 cubic metres of water per day. However, when the mill operates in full capacity, the water demand may reach 320,000 cubic metres per day. If the water reservoir fails to be operated in time, the steel mill cannot start operation.

As planned, in the first phase of the project, with expected investment capital of $8.9 billion, Formusa Ha Tinh Cast Iron and Steel Complex would be finish a series of construction items such as Son Duong deep-water port, steel mill with designed capacity of 7.5 million tonnes and power generation plant of 750  MW. The investor planned to raise the production capacity to 22 million tonnes per year.

 

Category: Business