Exclusive: China's Sinopec in talks to buy $3 billion chemical plant shut over safety - sources
By Chen Aizhu
BEIJING (Reuters) - Chinese state energy giant Sinopec Corp (0386.HK: Quote) is in advanced talks on taking a controlling stake in petrochemical firm Dragon Aromatics, which operates one of the country's biggest chemical plants, three sources with knowledge of the matter said.
The discussions come after the independent petrochemical firm suffered a second major fire in less than two years at the $3 billion plant in Fujian and sources said local authorities want Sinopec to participate before allowing the plant to reopen.
The tough line shows how Beijing is putting pressure on provinces to ensure better industrial safety standards and protect the environment after a series of accidents has stirred protests from residents opposed to plants in their backyard.
Dragon Aromatics, owned by Taiwan's Xianglu Group, was forced to shut the plant with a capacity to produce 1.6 million tonnes a year of paraxylene (PX), a chemical used to make polyester fiber and plastics, after the fire in April.
"This is what the local government has insisted: without Sinopec's participation the plant won't be allowed to resume operations," said one of the sources, who declined to be named due to the sensitivity of the discussions.
Sinopec could take up to 80 percent of the stake, the source added.
Sinopec spokesman Lu Dapeng declined to comment.
A senior Dragon Aromatics official said that he was not in a position to comment on the communications at the board level but told Reuters the firm was "trying every means to resume the plant's production as soon as possible." Continued...