Formosa Petrochemical Corp (台塑石化) said yesterday that it would resume a joint venture with US-based Kraton Performance Polymers and invest NT$450 million (US$15.19 million) to expand its naphtha cracker in Yunlin County’s Mailiao Township (麥寮).
“Formosa Petrochemical and Kraton would first invest NT$450 million each. In the future the total investment could reach US$200 million,” Formosa Petrochemical spokesman Lin Keh-yen (林克彥) said by telephone yesterday.
The project gained the Fair Trade Commission’s approval in October 2011, but was deemed inappropriate by the Environmental Protection Administration (EPA) in July last year because the volatile organic compound (VOC) emissions from the project would exceed the regulatory limit after the expansion.
Under the EPA’s regulations, VOC emissions generated from flares, water cooling tanks and while painting, cleaning and performing annual maintenance on water storage tanks should also be viewed as sources of pollutants and are thus subject to the regulatory VOC limit.
However, Formosa won an administrative appeal against the EPA in December last year, after the Executive Yuan overruled the EPA’s decision and asked the agency to exclude VOC emissions not generated in the production process from the total emissions.
Lin yesterday said the expansion project would be operational by 2015, and it would produce hydrogenated styrenic block copolymer (HSBC), a high value-added rubber product used in medical and electronics industries.
Because of the high value-added nature of HSBC, the product’s transportation costs are relatively low; thus, it can easily be shipped around the world, he said.
The companies are particularly suited for a joint venture because Kraton has the technology, personnel and market access, while Formosa Petrochemical has the raw materials for producing HSBC.
Lin estimated that the new venture could produce products worth between US$150 million and US$200 million per year if the plant runs at full capacity, but the company would set its production level based on the clients’ needs, he added.
Formosa Petrochemical reported the revenue on a consolidated basis of NT$88.37 billion in January, up 24.87 percent from NT$70.77 billion of a year ago.
The company’s shares fell 0.12 percent yesterday to NT$82.4, under-performing the TAIEX, which rose 0.84 percent. For the past 12 months, the shares were down 13.54 percent, while the TAIEX declined 1.89 percent.