Incheon threatening to halt work on factory

SK Incheon Petrochem’s 1.6 trillion won ($1.4 billion) plan to expand its paraxylene plant in Incheon is in trouble after the Seo (West) District Office of the Incheon Metropolitan Government announced it will notify the company to stop construction for violating regulations and standards.

The district office on Monday also said it has asked the Ministry of Trade, Industry and Energy if it is possible to cancel the construction license.

According to the district office, the Incheon city government conducted inspections at the construction site starting in October and reported the results Dec. 5.

The city said SK Incheon Petrochem had erected unauthorized structures and failed to report the size of the construction area. The district office said it has imposed a fine since the company also failed to conduct a proper environmental evaluation after the inspection.

SK Incheon Petrochem released a statement yesterday saying it will keep working to correct the problems, but if the district office stops construction it will defend its actions using all possible legal means.

“The company and our suppliers have been receiving enormous damage because of construction delays and our corporate image also has been damaged,” the company said in a release. “We want the Seo District Office to quickly and fairly review the issue and prevent additional damages.”

SK Incheon Petrochem, part of SK Innovation, said construction is 90 percent complete and operational testing is scheduled to begin in April. SK Group, which acquired the company in 2006, invested 1.6 trillion won to expand production of paraxylene, a material used to make PET (polyethylene terephthalate) bottles.

SK Incheon Petrochem refuted the inspection results, saying construction has been regulated and that there was no problem so far because this kind of major project was authorized through inspections from the beginning. The company said it even stopped construction from Dec. 31 to Jan. 2 to conduct its own on-site inspection and no major problems were found.

As for Incheon Metropolitan Government’s proposal to establish a council with residents of the community, the company said the process is under way and it is ready to have a dialogue concerning the impact of the plant expansion.

“The council will discuss issues involving safety and the environment, and how to improve inspections,” the company said in a release. “We are also actively trying to find out how to help the local community.”

BY JOO KYUNG-DON [kjoo@joongang.co.kr ]