Royal Dutch Shell

Chi Mei quits plans for Huizhou plant

PUBLISHED : Wednesday, 22 May, 1996, 12:00am
UPDATED : Wednesday, 22 May, 1996, 12:00am

One of Taiwan's largest chemical companies has dropped plans to build what would have been the world's largest ABS plastics plant in southern China because of delays in the approval of an enormous Shell Oil Co refinery.

Chi Mei Industrial Corp would instead invest US$44.5 million in a smaller polystyrene plant and storage facilities in Zhenjiang, Jiangsu province, a company vice-president said yesterday.

The plant initially will have a capacity of 150,000 tonnes a year and is expected to go into operation in the fourth quarter of next year.

The official said: 'Several years ago Shell invited us to set up an acrylonitrile butadiene styrene (ABS) plant and said its oil refinery would provide us with raw materials for production. But Shell has never said whether it will definitely be able to go ahead with the project.

'We have our own plans and we do not want to wait any longer.' Chi Mei's decision to move its investment to Zhenjiang is a blow to the long-term plan by Huizhou authorities to establish the district as a key heavy industry base in Guangdong province.

Chinese car-maker Dong Feng has teamed up with Honda to make car components in Huizhou, near Daya Bay, and plans to expand it into a 10 billion yuan (about HK$9.28 billion) car manufacturing base.

Nevertheless, Shell's $5.4 billion joint-venture oil refinery is seen as the lynchpin to Huizhou's long-term industrial growth.

The project has been awaiting final approval for years as Shell and Beijing haggle over access to marketing and distribution in the domestic market.

Chi Mei originally had planned to invest $94.5 million in an ABS plastics plant in Huizhou with an output of 2.25 million tonnes a year - the largest in the world.

It dropped the idea because China said the proposed site was next to environmentally protected water resources and Shell had still not obtained approval for its refinery.

'Polystyrene is simpler to make than ABS and there is a large demand,' the Chi Mei official said.

'If Shell actually builds its refinery, we will still consider having an ABS plant there.' The company said it decided to build the polystyrene plant in Zhenjiang because it was a transport hub for China's eastern seaboard.

The Taiwanese firm will own 85 per cent of the joint venture, which includes a $29.5 million plant and $15 million storage facilities.

Chi Mei's partners are China Light Industry Association and Zhenjiang Port Economic Development Zone.