Formosa Plastics to start massive $28B expansion

Taiwan's Ministry of Economic Affairs has confirmed that Formosa Plastics (FPG) (Taipei, Taiwan) will go ahead with major expansion plans and greenfield projects at the company's major petrochemical project at Yunlin county in the southeastern part of the country. Imminent projects will take an investment of $7.6 billion, which will form part of the $28 billion injection into the complex in the "fifth-phase expansion project" over the next five years.

The expansion plans mark an enlargement of the plans proposed in the last quarter of 2007 and signal a rise in the business mood triggered by the prospect of a new government, which will take over in May. The overall plans, covering 39 industrial plants, will see capacity expanded at 24 plants and the building of 15 new facilities. The group's total petrochemical will be increased by 12 million tons per annum (TPA), and naphtha-cracking capacity will be increased to 31 million TPA.

FPG will build an oil refinery with a capacity of 150,000 barrels per day (BBL/d), giving the company a total oil refining capacity of about 700,000 BBL/d, which will top the output of state-owned refiner CPC Corporation.

With an estimated requirement of 150,200 tons of water per day required when all the works are completed, FPG will coordinate closely with the ministry and environmental protection authorities. Significant amounts taken from the project investments will be allocated to address environmental problems.

FPG will also invest $600 million in projects in Vietnam over the next two years that will build on the $700 million the company has already invested in the country. Among the projects will be a nylon plant and expansion of polyester and yarn spinning capacity. The company may invest in a cogeneration power plant. It sees Vietnam becoming its largest overseas production base after the U.S. and China. The Vietnamese government has given the go-ahead to invest in the Vung Ang 15 million TPA steel complex and deep water port in central Ha Tinh province that is scheduled for commissioning in 2011. FPG is investing $1.3 billion in the Son Duong deep-water port with the capacity to take 200,000-ton vessels and handle 55.5 million TPA of cargo.

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