A decision by the Chinese government to ease restrictions on foreign investment in naphtha cracking in the mainland, has led Formosa Plastics Group, Taiwan’s largest supplier of plastics to resume its investment in setting up manufacturing base of ethylene in Ningbo, eastern China, as per CENS.
Building a complex, including oil refineries, naphtha cracking plants and downstream factories of petroleum products, in China, was one of the biggest investments proposed by the group’s late chairman, Wang Yung-ching, many years ago, and valued at US$10 billion then. The proposal was approved by the Chinese government as part of its 11th Five-year Plan, but Wang rejected the country’s condition for a half stock in the complex yielded to China Petrochemical Corporation, causing bilateral talks over the investment to stall.
To solve the stalemate, later on the group was forced to agree to have the complex shared equally with the said Chinese firm, and removed refineries from the investment case due to market considerations. However, the investment remained suspended eventually for other political and regulatory reasons. The Chinese government’s move to amend restrictions on foreign investments in naphtha cracking at the end of last year, along with its determination to speed up economic development after leadership shakeup in mid-November, has cast rays of hopes to the almost dead grand investment project.
According to the company, the group will resume the investment project by spending US$5 billion to set up the petroleum complex encompassing an ethylene plant with annual output of 1.2 million metric tons and factories of plastics in Ningbo. Under the amended rules and regulations, the group won’t have to share the complex with any single Chinese enterprises as ordered in the past, but run it with the stock partly owned by Ningbo City Government.
Besides, the new regulations grant the group full ownership of ethylene derived from naphtha cracking in the complex, so the group will be able to secure ample supply of the material to produce PVC, ABS, PTA, PP, AE, etc. locally at its other factories in Ningbo, instead of relying on shipment from Taiwan.
(by Steve Chuang)