State-run oil refiner CPC Corp, Taiwan (CPC, 台灣中油) yesterday announced that it plans to set up a NT$8.6 billion (US$286 million) petrochemical joint venture with synthetic rubber maker TSRC Corp (台橡) and Fubon Financial Holding Venture Capital Corp (富邦金控創投) to develop value-added products.
The NT$8.6 billion includes a NT$4.3 billion investment by shareholders and NT$4.3 billion in bank loans, CPC said.
The joint venture, Taiwan Advanced Materials Co (台耀石化材料科技), in which CPC, TSRC and Fubon Financial hold stakes of 49 percent, 48 percent and 3 percent respectively, is expected to start operations by the end of 2013, with yearly output reaching NT$5.8 billion, a CPC Corp official said.
“It is the first time CPC is entering the market for high value-added petrochemical products,” CPC vice president Paul Chen (陳綠蔚) told a media briefing after the three companies signed an agreement on the joint venture.
Chen said the joint venture would help enhance vertical -integration within the domestic petrochemical sector.
Taiwan Advanced Materials is expected to build several plants to separate 150,000 tonnes of carbon-5 (C5) fractions, produce 30,000 tonnes of -styrene-isoprene-styrene (SIS) and supply 19,000 tonnes of C5 petroleum resin a year, CPC said.
TSRC president Tu Wei-hua (涂偉華) said there are fewer than 10 companies manufacturing C5 resin products in the world, while SIS could be used to make specific medical products and high--quality adhesives, such as products for 3M Co, with a relatively high margin of between 18 percent and 19 percent.
In addition, the current price of SIS stands at more than US$3,000 per tonne, reflecting its relatively high value, CPC said.
CPC expects the joint venture’s rate of return to reach at least 12 percent, while the rate may climb to higher than 16 percent in terms of CPC’s investment.
Tu said the new joint venture would need to gain the approval of the Fair Trade Commission before the investors decide the company’s management arrangements.
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