The Urethane Blog

Wanhua Steps Back

Amid China, U.S. trade fight, Wanhua reevaluates new $1.25B chemical plant in St. James

China US Trade
FILE – In this April 6, 2018, file photo, containers are loaded onto a cargo ship at the port in Qingdao in east China’s Shandong province.

 

Officials behind a $1.25 billion chemical plant proposed for St. James Parish say they are taking a step back to review the scale and location of the new facility.

Wanhua Chemical, a China-based company with investment ties to the Chinese government, announced in November it would be building an MDI complex on 250 acres next to the Occidental Chemical plant in Convent along the Mississippi River. MDI is often used to make manufacture polyurethane foam.

But William Day, an official with Wanhua U.S. operations, said in a statement late Wednesday evening that the project is under review.

“Due to (a) significant increase in the capital expenditure budget of the MDI Project in the past year, the Company decided to change the scope of the Project,” Day wrote in a prepared statement in response to questions. “A new project location is also under review.”

The statement did not give reasons for the increase in capital expenditures, but the company had, before the November announcement, expressed worry in the summer of 2018 about President Donald Trump’s trade fight with China and the effect of the tariffs he had imposed.

Company officials said then that steel and aluminum tariffs imposed by Trump earlier that year were adding “tens of millions” of dollars in costs.

Since Wanhua decided to locate in St. James Parish, the company has tried with mixed success to seek breaks in the tariffs from the U.S. trade representative and has a request pending for Foreign Trade Zone status through the Port of South Louisiana. The zone would provide the company with tariff relief.

Day’s statement does not affirm the company would remain in Louisiana, only in the United States.

“Nevertheless, the Company’s plan and commitment to build an MDI facility in the U.S. remains unchanged, and will continue to implement it,” Day said.

Even before the company’s statements Wednesday, the project had run into road blocks. Wanhua’s pursuit of the trade zone status, which could also affect local tax revenues without an agreement excluding those breaks, came as news to St. James Parish officials in June and led the Parish Council to refer the project back to its Planning Commission last month as part of an appeal by environmental groups.

Then, on Monday, the Planning Commission deferred action for 30 days. Parish officials have said that the deferral was to allow the commission time to digest the impact of the foreign trade zone information — which was not available to the commission when it first approved the plant — and also disclosures from environmental groups that the Chinese government is a Wanhua investor.

The facility needs a land use approval from the parish to proceed.

Community and environmental groups have been fighting the wave of new industrial facilities proposed for the parish’s north end and, in particular, the use of deadly phosgene gas at the Wanhua facility about a mile from homes in Convent. Company officials have said they would follow environmental and safety protocols to protect against leaks or other accidents.

Don Pierson, secretary of the state Department of Economic Development, said the agency “is aware that Wanhua has been facing a handful of challenges regarding its proposed St. James Parish project, and that the company is in the process of re-evaluating its project scope.”

He didn’t offer more details.

The proposed methylene diphenyl isocyanate plant would have been supplied with some key chemical inputs from OxyChem’s plant on River Road.

St. James Parish President Timmy Roussel said in a statement Thursday morning that Wanhua officials have informed the parish that rising construction cost estimates led the company to consider reduce the plant’s footprint by two-thirds.

As a result, “we are told that OxyChem pulled back on their land option,” Roussel said. He said Wanhua is seeking another parcel.

OxyChem officials declined to offer any details.

“We would refer you to Wanhua,” Shane Boyd, a spokesman for OxyChem, wrote Wednesday evening. “We have nothing to offer regarding your inquiry.”

https://www.theadvocate.com/baton_rouge/news/article_4c2cf60c-ca51-11e9-a233-c7e3236b79fc.html