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.