CPC Corp, Taiwan (CPC, 台灣中油) yesterday said it is winding down Taiwan-Japan Oxo Chemical Industries Inc (TJOC, 曄揚), a joint venture with Japanese petrochemical maker KH Neochem Co, due to difficulties obtaining regulatory approval.
Formed in 2016, the venture would have been one of the largest Taiwanese-Japanese petrochemical investments at about NT$13.7 billion (US$444.07 million), but it has faced resistance from locals near the planned site in Kaohsiung over potential air pollution.
CPC and KH Neochem, which owns a 47 percent stake in TJOC, are expected to split the estimated NT$400 million loss from the unit’s liquidation, along with Mega International Commercial Bank (兆豐銀行), which holds a 6 percent stake.
In October last year, KH Neochem’s board of directors announced the decision to pull out of the deal.
The state-run CPC has begun the liquidation process, pending approval from the Ministry of Economic Affairs, vice president Fang Jeng-zen (方振仁) said.
There were other factors apart from regulatory hurdles that led to the demise of TJOC, including higher-than-expected construction costs, while falling oil prices and slowing global economic growth have cast uncertainty and gloom over the petrochemical sector, Fang said by telephone.
TJOC was aiming to tap into the market for higher value-added petrochemical products and had plans to build up an annual output of 180,000 tonnes of isononyl alcohol (INA) and 21,000 tonnes of butylene terpolymer using production technologies licensed from KH Neochem.
The firms were particularly optimistic about INA, which is used to produce di-isononyl phthalate, a plasticizer used to replace di-octyl phthalate following an EU ban.
“CPC has maintained good relations with KH Neochem and does not rule out exploring other collaborations in the future,” Fang said.
“Expanding into segments of high value-added products remains a priority at CPC,” Fang said, adding that higher-tier products have much smaller production volumes, which would help mitigate concerns about pollution.
Meanwhile, a meeting between CPC chairman Tai Chein (戴謙) and Kaohsiung Mayor Han Kuo-yu (韓國瑜) on Friday last week established better communication between the two sides and would help the city balance investment opportunities, economic growth and environmental conservation, Fang said.
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