LCY halts PP production; politicians resign following fatal blasts

By Nina Ying Sun
Assistant Managing Editor

Published: August 11, 2014 4:45 pm ET
Updated: August 11, 2014 9:25 pm ET

Image By: Kaohsiung city government Thirty people were killed in a July 31 explosion in Taiwan's second-largest city, Kaohsiung.

Related to this story

Topics Public Policy, Materials, Materials Suppliers, Asia

LCY Chemical Corp. has halted polypropylene production in the wake of propylene gas explosions that killed 30 in Taiwan on July 31.

Meanwhile, as local media reports expose safety issues with Taiwan’s infrastructure, some politicians have handed in resignation letters.

And LCY, which has seen the deal to merge its styrenic block copolymer (SBC) operations with Kraton Performance Polymers Inc. collapse, is demanding a break-up fee from Kraton.

LCY stopped the PP production at its Dashe plant in Kaohsiung on Aug. 8, as ordered by local authorities. The company expects to lose 51 million new Taiwan dollars (US$1.6 million) per day in regular PP sales during the temporary shutdown, according to a filing with the Taiwan Stock Exchange.

While pledging to make full efforts to assist with government inspection and improve its operation, LCY expressed concerns with the shutdown’s impact on its 5,000 employees and their families. In a news release, the company called for the government to give the green light for LCY to resume production “as soon as possible.”

LCY had announced a four-day voluntary suspension of the production at Dashe plant from Aug. 6-9, so employees could participate in a public memorial for the victims. The company expected to take a 139 million new Taiwan dollar (US$4.63 million) hit on PP sales as a result.

With 400,000 tons of annual capacity at the Dashe facility, LCY is one of the three major PP suppliers in Taiwan.

PP was LCY’s second largest revenue source in fiscal year 2013, representing 31 percent of company-wide sales.

Its largest business unit, styrenic block copolymers, just saw the collapse of a high-profile merger deal with Houston-based Kraton.

Kraton announced on Aug. 6 the withdrawal of its board’s prior recommendation that Kraton’s stockholders approve the merger deal. In response, LCY said in an Aug. 8 statement that it has decided to terminate the contract with Kraton.

Kraton said it would not have to pay a $25 million break-up fee to withdraw from the deal. A provision in the original agreement had that said the fee would not be required if LCY had a “material adverse effect” — and Kraton’s board said the July 31 explosions qualify.

LCY, however, said Aug. 8 it would demand the fee, based on the terms of the agreement.

The explosions’ ramifications have expanded beyond LCY, as reports exposed deeper issues of Taiwan’s infrastructure and its safety. Facing public scrutiny and mounting pressure, some politicians have resigned.

Image By: Kaohsiung city government The explosion caused extensive damage in Kaohsiung, Taiwan, in addition to 30 deaths.

Taiwan’s economy minister Chang Chia-Juch has stepped down, taking the blame, mainly from the Kaohsiung government, for his ministry failing to regulate the pipelines. In an Aug. 7 published statement, Chang said he hoped that by shouldering the entire blame, Taiwanese politicians could stop finger pointing and focus on resolving the difficult situation.

Four Kaohsiung city officials also resigned, after Taipei-based China Times said the city had lied about its knowledge of underground pipelines.

Although the official investigation is yet to announce findings, various media reports have said that the pipeline in question is located inside an underground drain canal. Scientists and politicians said the drainage water could have been eroding the propylene pipeline and the leaked gas traveled through the drain canal to the explosion sites.

On Aug. 11, local prosecutors summoned seven employees from LCP and the China General Terminal and Distribution Corp. who were directly related to the operation of the pipelines prior to the explosions. All were suspected of causing “public danger” and were released on bond, according to Taiwan’s United Daily News.


Comments

LCY halts PP production; politicians resign following fatal blasts

By Nina Ying Sun
Assistant Managing Editor

Published: August 11, 2014 4:45 pm ET
Updated: August 11, 2014 9:25 pm ET

Post Your Comments


Back to story


More stories

Image

Bayer spinning off plastics business

September 18, 2014 8:49 am ET

Bayer AG will spin off its MaterialScience plastics group into a separate, publicly-traded company within the next 12 to 18 months.    More

Image

Study: 75 percent of Australia's ocean debris is plastic

September 18, 2014 7:48 pm ET

About 75 percent of the trash found in the waters off Australia's beaches is plastic, with most of that coming from local sources rather than sea-...    More

Image

Investor group wants DuPont to split in two

September 18, 2014 7:37 pm ET

Investment firm Trian Fund Management LP is calling for plastics and chemicals giant DuPont Co. to split itself into two firms, one of which would...    More

Image

P&G removing PE microbeads from its Crest brand toothpaste

September 18, 2014 1:57 pm ET

After months of prodding, Procter & Gamble Co., the makers of Crest brand toothpastes, say polyethlene microbeads will be completely removed from its ...    More

Image

Minnesota receives grant to help develop new bioplastics

September 17, 2014 4:08 pm ET

The University of Minnesota has received a $20 million grant to fund the development of new types of bioplastics.    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events