The Guangzhou municipal government has ordered a halt to the construction of two chemical projects by Kingboard Chemical Holdings, delivering a setback to the firm's plan to broaden the vertical integration of its operations. Explaining the shutdowns, Guangzhou cited a lack of approval with regard to environmental impact assessments. The main board-listed company, which makes laminates - a raw material used in the manufacture of the printed circuit boards found in electronic products - had hoped to increase cost savings by producing more raw materials in-house. According to its spokesman, the company and Guangzhou's municipal Environmental Protection Bureau held a joint press conference on Friday in Guangzhou to clarify mainland news reports on the issue. Nanfang Daily quoted a bureau spokesman as saying in the conference that in March, the bureau became aware that Kingboard had failed to conduct environmental impact assessments before starting work on a 50,000 tonne-a-year sodium hydro-sulphite plant and a 65,000 tonne-a-year hydrogen peroxide plant. A government order was handed down on April 22 requiring Kingboard to stop construction of the plants and complete the necessary environmental protection procedures, it added. Hydrogen peroxide is used in laminate production while sodium hydro-sulphite is used in the production of a wide variety of products such as cleaners, food and beverages, pulp and paper, and textiles. The Kingboard spokesman confirmed the report but said management was unavailable yesterday to comment on the impact of the delay, or the likelihood and timing of the required approvals. Kingboard has eight chemical plant construction and expansion projects in the Nansha Economic and Technological Development Zone, which is under the jurisdiction of Guangzhou. According to the environmental bureau spokesman, five of the projects have received approval while one is going through the approval process. Kingboard said in March it was intending to expand the annual output capacity of its hydrogen peroxide operation from 60,000 tonnes at the end of last year to 192,000 tonnes by this year's second quarter. It had planned to complete the sodium hydro-sulphite plant during the second quarter. The company last week said it expected its net profit to surge by up to 200 per cent in the six months to June due to a rise in laminate prices of about 30 per cent and an increase in laminate sales volume of more than 30 per cent.