September 30, 2016 / 5:56 AM / 10 months ago

Formosa Chemicals to shut down Taiwan plant amid regulatory battle

2 Min Read

TAIPEI, Sept 30 (Reuters) - Formosa Chemicals & Fiber Corp , a unit of Formosa Plastic Group, said on Friday it will shut down its plant in central Taiwan beginning next week as the local government declined to renew permits for its cogeneration equipment.

Formosa Chemicals has applied to renew the license for the power plant equipment, however the Changhua county government insisted the company apply for a new permit because the amount of coal and steam used during the manufacturing process has changed over the intervening decades, said vice chairman Hong Fu-yuan.

The plant mainly makes textile-related materials, such as rayon staple fiber and nylon fiber.

"We are facing a major crisis," said the vice chairman. "We have stopped shipping raw materials used in making products today," he said, adding that the application for renewal has been rejected 37 times by the county government.

County government officials couldn't be reached immediately for comment.

A shutdown of the plant would affect 1,000 workers, the vice chairman said. About half of its output is shipped overseas, and the plant generates about T$10 billion ($320 million) in annual revenues, accounting for about 3 percent of the company's total revenue.

Shares of the company closed down 1.3 percent, roughly in line with the main index's 1.12 percent slide. (Reporting by Faith Hung; Editing by Christian Schmollinger)

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