Taiwan | Formosa seeks US permit for USD9.4 billion investment

Formosa Plastics Group is seeking permission from the U.S. state of Louisiana to invest USD9.4 billion to build petrochemical plants.

The Taiwanese chemicals producer is waiting for the U.S. state’s authorization for construction of the facilities in St. James, according to Lin Keh-Yen, executive vice president of Formosa Petrochemical Corp. The group also plans another $5 billion investment to expand production lines in Texas, Formosa Plastics Corp. Chairman Jason Lin said by phone.

Formosa joins other Asian companies in boosting investments in the U.S. amid President Donald Trump’s pledges to create American jobs. U.S. shale gas offers a cheaper alternative source of raw materials for petrochemicals production, making such U.S.-based projects potentially more profitable amid rising prices of oil, according to IHS Chemical Insight.

“Seeking a permit solidifies that Formosa wants to do the project,” said Tony Potter, a vice president at IHS in Singapore. “Ethane prices will remain relatively low. Because of the lower cost, you have a situation where the U.S. ethane based production will be able to deliver polymer products into places like China cheaper than they can be made from naphtha in China and the surrounding countries like Taiwan, Japan, Korea, Thailand, Singapore.”

The Louisiana project, in which group members Formosa Petrochemical and Formosa Chemicals & Fibre Corp. will invest, includes an ethane cracker with annual capacity of 1.2 million metric tons and a 600,000 ton-per-
year propylene plant in phase one, Formosa Petrochemical’s Lin said. In the second phase, it will build another ethylene plant with capacity of 1.2 million tons a year, he said.

Formosa Plastics Group, which began to invest in the U.S. in 1978, has production facilities there including a polyester plant in South Carolina and an ethylene glycol plant in Texas, according to its website.

The expansion in Texas is already underway, which will be completed by 2018, Formosa Plastics Corp.’s Lin said. “Materials are cheaper in the U.S. and it’s easier to get air permits in U.S. than in Taiwan,” he said. Bloomberg