FPG Foraying Into Synthetic-Rubber Market in China

Taipei, March 18, 2011 (CENS)--To tap the huge business opportunities associated with China's fast developing auto market, Formosa Plastics Group (FPG) will establish a synthetic rubber company in China, involving NT$18 billion of investment in the medium-to short-term.

Three member firms of FPG, Nan Ya, Formosa Chemicals and Fibre, and Formosa Petrochemical, will chip in capital for the venture. This is the first time for FPG to foray into the realm of synthetic rubber and the first investment project for Formosa Petrochemical in China.

Formosa Chemical announced yesterday (March 17) decision to invest US$30 million (NT$885 million) in the project, which will be of vertically integrated operation, covering the downstream sector as well. It will compete against existing domestic suppliers, mainly TSRC and Nante.

The project was originally an item of the fifth-stage expansion project of FPG's naphtha cracking complex in the Mailiao Industrial Zone, in the southern Taiwan county of Yunlin. The expansion project, involving some NT$300 billion of investment, has been stalled for six years, due to inability to obtain the approval for its environmental impact assessment.

The joint venture will be evenly owned by the three FPG firms, each holding one third of the total stake. Total investment will top NT$40 billion in the long term. Sited within the Ningbo petrochemical zone, the facility will mainly produce IIR, featuring higher added value, mainly for the production of auto inner tires. Initial capacity will reach 50,000 metric tons annually, which will be doubled to 100,000 later on, for the production of not only IIR, but also other synthetic rubbers, including SBR and NBR.