The petrochemicals business is the upstream supplier of raw materials for the synthetic fiber and textile industry. A stable supply of raw materials has been essential for the steady growth of the Far Eastern Group's synthetic fiber and textile business.
After completing the vertical integration of its textile business including synthetic fibers, spinning, dyeing, finishing, and apparel in 1971, the Far Eastern Group began investing in the upstream production of synthetic fiber raw materials in order to ensure a stable supply of these materials.
When the first petroleum crisis struck in 1973, the prices of synthetic fiber raw materials soared, and they became very hard to obtain. In compliance with the government's petrochemical industry policy, the Far Eastern Group participated in the Oriental Union Chemical Corp. (OUCC) investment project in 1975 and began producing ethylene glycol (EG) íV the raw material used to make polyester fibers. This was its first venture in the petrochemical industry. It established the joint venture Alberta & Orient Glycol Co. Ltd. in Canada with Union Carbide and Mitsui in 1990; this company has been using natural gas to produce EG with a cost advantage. (Dow Chemical acquired Union Carbide in 2001, so we are now partners with Dow Chemical.)
Then booming of the global polyester fiber industry resulted in shortage of PTA, another key raw material used in polyester and prices rose sharply. To ensure steady supply of raw materials and seize this opportunity, the Group formed a joint venture with British company ICI in 1995 to establish ICI Far Eastern Ltd. in Taiwan to produce PTA. (ICI transferred equity to DuPont in 1997, making DuPont our new partner in this joint venture; the joint venture company was also renamed as DuPont Far Eastern Petrochemicals Ltd. DuPont sold its textile department to Koch Industries in 2004; the company has been renamed again as Invista Far Eastern Petrochemicals Co. Ltd., 2008 FEG puchased back the shareholdings from Koch Industries, and it is again renamed as Oriental Petrochemical (Taiwan) Coporation with current annual 900,000 tons PTA production capacity.
Given speedy growth of polyester business in China during recent years, and the fact that the self-sufficiency rate of PTA is less than 50%, the Far Eastern Group established Oriental Petrochemicals (Shanghai) Corp. in Pudong, Shanghai. This plant is targeted to commence operations in 2006 with an annual production of 600,000 tons. Future expansions will continue to ensure smooth operations in China.
Orient Union Chemical Corporation has entered the special chemical and industrial gas markets, and produces EA, EC, and industrial gases including nitrogen, hydrogen, and oxygen. OUCC is currently planning a move into biotechnology and hopes to develop new product categories.
Chahui Power Corporation is the Far Eastern Group's extension of its cement plant cogeneration technology. The Group recently entered this area in compliance with the government's long-term power source development plan. Chahui Power supplied 670 kW of power in 2004.