HOUSTON (Oct. 17, 2012)—Kraton Performance Polymers Inc. of Houston has exited its joint venture deal with Taipei, Taiwan-based Formosa Petrochemical Corp., seeking instead to expand hydrogenated styrenic block copolymer manufacturing capability in Asia on a stand-alone basis.
The company is focusing on locations in the region that were identified during the site-selection process conducted in 2010 and early 2011, Kraton said.
Kraton opted not to extend the previously announced Framework Agreement with FPCC, which expired Sept. 30. The agreement had governed the formation of a proposed 50/50 joint venture to build, own and operate a 66-million-pound HSBC plant at FPCC's petrochemical site in Mailiao, Taiwan.
The project was delayed, first by the wait for environmental permit approval, Kraton said. After the permit was approved in July, FPCC considered the conditions to be too restrictive and limiting on its overall operation in Mailiao.
However, an Oct. 11 report from Taiwan's Economic Daily said FPCC was going to file an appeal by Oct. 12, after the environmental protection authorities once again rejected FPCC's proposal and indicated additional restrictions.
“We believe a significant amount of the engineering and design work conducted to date will be applicable to the alternate location,” said Kevin Fogarty, Kraton's president and CEO. “Moreover, given our significant liquidity and the strength of our balance sheet, we are well-positioned to develop and fund the project on a stand-alone basis.”
He added that Kraton will explore expansion projects within its current operating capability to possibly bridge, if necessary, the timing for the new stand-alone HSBC production.
The company said it is “not possible to estimate with certainty” the project cost or the time line for an alternate, stand-alone location. It said the options under consideration are within industrial sites where Kraton should have access to existing infrastructure and utilities, thus minimizing overall project expenditure.