My Turn – Dr. Balaji B. Singh
1974-75 No one ever heard of China – it was just a dragon giant of a shadow behind the bamboo curtain. Now 2007 no one can ignore or stop talking about China.
All the discussions are focused on the sun setting in the Western chemical industry and rising full force in China.
There are nations on the gateway to China – ASEAN Countries including Thailand, Vietnam, Malaysia, Taiwan, Singapore, etc., – That will be the future bridges between the progressing China and the Western Nations.
Plan on attending the FlexPO2007 Polyolefins and Elastomers Innovations Conference October 17-19, 2007 where we are bringing together for the first time, the whole polyolefins world to Bangkok to meet, exchange and plan for Global growth via innovations. For more information visit www.CMRHouTex.com
Pequiven and Braskem select Basell’s technology for a 450 KT per year PP plant
Pequiven, Petroquímica de Venezuela, the Venezuelan State-owned Company, and Braskem, the South American market leader in thermoplastic resins, have signed a license agreement to use Basell’s Spheripol technology for a new 450 KT per year polypropylene plant. The plant will be built by their new joint venture under implementation in Jose, Venezuela, with an expected start-up in 2009.
The Spheripol process is the most widely used polypropylene technology in the world, with more than 19.5 million tons of licensed capacity.
Comments: This project now seems to be underway after facing some setbacks and more than seven years of planning. This project was originally sketched out in 2004 between ExxonMobil and Pequiven. In Feb. 2006 Exxon Mobil said that Pequiven had suspended a preliminary development agreement (PDA) for a planned 50-50 joint venture to develop a $3 billion olefins plant in the eastern Venezuela city of Jose. After this, in April 2006 there was the announcement that Pequiven was considering a JV with Braskem. Braskem and Pequiven announced in April 2006 that over the next six months, they will study the operational, technological, marketing, financial, and strategic details of the project. In April 2007, the two companies announced an agreement for the constitution of a company to implement the project.
The investments for the implementation of the ethene production unit and the polyethylene units are estimated at US$ 2.5 billion. Braskem and Pequiven have also evaluated the possibility to invest in PVC and sodium hydroxide units. In parallel to the projects, Pequiven was to build a propane dehydrogenation unit for a production of 465 KT per year of propene, while the PDVSA Gás will build units to extract 1,800 KT/year of ethane.
Besides, Pequiven will make complementary investments in the Jose Complex infrastructure, increasing the total value of investments to more than US$ 5.0 billion.
Now it seems the companies have also started finalizing plans for other products – licensing of the Spheripol process for PP being one of them. Venezuela currently has only 110 KT of PP capacity located at the “El Tablazo” Petrochemical Complex in the Zulia State, on the northeastern coast of Lake Maracaibo. This facility is owned by Polipropileno de Venezuela Propilven, S.A., a Venezuelan mixed capital company. The company was established in 1985 and uses Mitsui’s Hypol process for manufacturing polypropylene.
Borealis sells its petrochemical business in Norway to Ineos
Continuing with the restructuring of its Norwegian operations, Borealis AS announced that it has reached an agreement to sell its petrochemical business in Bamble, Norway, to Ineos for EUR 290 million. It has also been decided to create a new independent innovation company to take over its innovation center in Bamble and to retain the existing group support functions at the location as a separate unit. The facilities sold to Ineos comprise a 175 KT per year polypropylene (PP) unit and a 140 KT per year low-density polyethylene (LDPE) unit, as well as a 50% share of the 557 KT Noretyl gas cracker. The polyolefin units manufacture plastics mainly for the growing molding, film and fiber, and extrusion coating industries in Northern Europe.
An estimated 290 out of 450 Borealis employees are affected by the sale of the operations to Ineos. All 165 employees at the Noretyl cracker joint venture will be employed by Ineos once the transactions involving Ineo’s purchase of Borealis and Norsk Hydro’s polymer assets are completed. The sale of Borealis’ assets to Ineos is subject to clearance by EU competition authorities and other relevant anti-trust bodies and is expected to close in the third quarter of 2007.
Comments: Borealis currently has 2,825 KT of PE and 1,700 KT of PP capacity on a global basis. These capacities are distributed across Norway, Finland, Sweden, Austria, and Abu Dhabi. The current sale will decrease Borealis’ PE capacity by 5% and PP capacity by just over 10%. Borealis has 290 KT of PE capacity and 175 KT of PP capacity in Norway. The current sale only includes the LDPE capacity. The location also has an HDPE plant that does not seem to be included in the sale. Ineos through its Innovene acquisition is among the largest producers of HDPE and PP. This acquisition will strengthen the company’s PP position. This deal will also increase Ineos’ LDPE capacity.
The Noretyl ethylene cracker was commissioned in 1977 and expanded by 100 KT in 2005 and currently has a capacity of 557 KT in addition to a propylene capacity of 80 KT. The current acquisition of Borealis AS follows the recent announcement made by INEOS Capital, to buy Norsk Hydro ASA’s polymers business (Kerling) and completes the total purchase of the Noretyl cracker, a 50:50 Joint Venture between Norsk Hydro and Borealis AS. The opportunity to purchase both shareholding interests in the Noretyl cracker presents INEOS with unique benefits by bringing the chemicals businesses at Rafnes under a single ownership.
The acquisition of Borealis AS provides a complementary fit with its existing Olefins and Polyolefins portfolios, technology, and expertise. It also improves integration into key feedstocks allowing the company to optimize across its existing assets in Scotland (Grangemouth), Benelux (Antwerp, Lillo, and Geel), Germany (Köln and Wilhelmshaven), and France (Lavéra) giving INEOS an extended geographic reach in European Markets. It would seem that the current acquisition is a follow-up to the recent Norsk Hydro ASA acquisition to own 100% of the assets; the polymer businesses could be part of the deal as the facilities seem to be integrated.
Basell to debottleneck its Spherizone plant in Italy
Basell announced that it plans to implement a new debottlenecking and revamping project for its Spherizone process plant in Brindisi, Italy. As a result of the investment, the capacity of the unit will be increased by 50 KT, bringing the total to 235 KT per year.
The revamped unit is expected to start up in the first quarter of 2009. This expansion follows the first debottlenecking project which was completed earlier this year.
According to the company, the enhanced properties of the polypropylene produced by the Spherizone process, such as improved clarity, impact, softness, and rigidity, enable Basell to bring innovative products to the market.
Comments: Spherizone is the newest technology platform based on – MultiZone Circulating Reactor (MZCR). This technology enables the production of more uniform and custom PP products, allowing producers to widen the breadth of the PP property envelope. Unlike blends obtained from reactors-in-series type technologies, the resulting MultiZone Circulating Reactor resins are claimed to have more homogenous intra-particle composition profiles leading to improved processability and final end-use properties. This is the Spheripol plant that was converted to Spherizone by Basell. It appears that the de-bottlenecking is a result of the plant being sold out. Spherizone license has been extremely successful with multiple plants coming on-stream this year,
Please review NGP Vol 7 Iss 1 for a detailed description of the MultiZone reactor technology.
Dow Technology to license UNIPOL™ PP technology to Shenhua Baotou Coal Chemicals to build 300 KTA PP plant in China
Dow Technology Licensing (DTL), a business unit of Dow Chemical Company announced that Shenhua Baotou Coal Chemicals Company, a leader among Chinese manufacturers pioneering the coal-based production of chemicals and plastics, has selected UNIPOL™ PP Technology from Dow for a new 300 KTA polypropylene (PP) facility. The plant will be constructed within the Shenhua Baotou Coal-to-Olefin complex in the Inner Mongolia Autonomous Region, The People’s Republic of China, and is expected to come online in 2010. Aker Kvaerner, an engineering and construction firm that has collaborated with DTL on numerous UNIPOL™ PP Technology lines around the world, will prepare the basic engineering design and provide technical advisory services.
Shenhua Baotou will be the 47th production line to utilize UNIPOL™ PP Technology, a gas-phase process for producing the broadest range of polypropylene resins. The system’s fluidized-bed reactors and high-performance SHAC™ Catalyst systems give manufacturers the flexibility to produce homopolymers, random copolymers, and impact copolymers for various grades of plastics.
Including the Shenhua Baotou Project, UNIPOL™ PP Technology will be utilized to produce almost 10 million metric tons of polypropylene per year which will be over 16% of total global capacity.
Comments: There is significant activity in China to convert coal to olefins. China has an abundant supply of coal and this route makes sense when oil prices are high. For PP production the company has selected Dow’s Unipol technology. Union Carbide extended the utility of the Unipol process by adapting it to produce polypropylene in the mid-1980s by utilizing Shell’s SHAC catalyst. As is usual for multi-reactor sequences, homopolymers or random copolymers are produced in the first stage, and the second stage is used to add an ethylene/propylene rubber component to the homopolymer produced in the first stage to make impact copolymers.
Unipol PP with an estimated capacity of almost 10,000 KT, has its largest installed capacity base in Asia-Pacific (>35%), North America (>30%), and Middle East/Africa. The Unipol PP technology is less widely used (<5%) in Japan and South America.
Access Industries owner buys 8.3% stake in Lyondell
Len Blavatnik, the investor who controls Access Industries Inc., bought the right to acquire a stake in Lyondell Chemical Co. in a prelude to a possible takeover. Lyondell shares had their biggest gain in more than seven years.
Blavatnik signed a forward contract with Merrill Lynch & Co. giving him the option to buy about 8.3 percent of Lyondell’s outstanding shares at $32.11 each, or $674 million.
Comments: There are some synergies between Lyondell & Basell if there was a merger/acquisition in the future. Lyondell produces propylene that Basell could use in manufacturing PP. Lyondell and Basell would also complement each other in making ethylene and polyethylene, as Lyondell’s assets are mostly in the U.S. and Basell’s are in Europe.
In 2005, Access Industries acquired Basell for about EUR 4.4 billion. Access may look to increase its stake in Lyondell to realize scale and integration benefits via a combination of the product portfolios of the two companies, as the true value of any synergies is unlikely to be realized through a passive minority stake.
Borouge signs US$3.1 billion contracts for the expansion project in UAE
Borouge, a leading provider of innovative, value-creating plastics solutions, formally signed contracts valued at approximately US$3.1 billion for Borouge 2, the major expansion project at the company’s production facilities in Ruwais, Abu Dhabi in the United Arab Emirates.
The contract with Tecnimont S.p.A., worth approximately US$1.855 billion, is for the construction of three new Borstar® technology polyolefins units and associated material handling facilities, laboratory facilities, and marine works. This is the largest supplier contract Borouge has signed since its inception as a company in 1998 and is awarded on a lump sum turnkey basis.
The contract with Tecnicas Reunidas S.A., worth an estimated value of US$1.234 billion, is for the construction of the offsite and utility facilities for the expanded plant and is awarded on a convertible lump sum turnkey basis. Preliminary work will begin immediately and both contracts are scheduled to be completed in 2010.
The Borouge 2 project will increase Borouge’s annual production capacity to two million tons of polyolefins, including for the first time, polypropylene. In January 2007, Borouge began the first stage of the construction process, when it formally signed a US$1.3 billion contract with Linde Engineering/CCC for the construction of a new ethylene cracker. The contract was awarded to Linde/CCC on a lump sum turnkey basis, with preliminary work already underway and completion scheduled for 2010.
Comments: This is a welcome development for polyolefins consumers in the Middle East and Asia Pacific countries. Borouge began the first stage of the construction process when it formally signed a $1.3 billion contract with Linde Engineering/CCC for the construction of a new ethylene cracker. This second major project, a reflection of Borouge’s serious commitment, assures the future growth of the petrochemical industry in the Gulf.
Based on the excellent market acceptance of the Borstar technology, these new contracts accelerate the momentum of the Borouge 2 expansion supplying additional Borstar Enhanced Polyethylene and now Borstar Enhanced Polypropylene to customers across the Middle East and Asia-Pacific. By expanding the product slate, Borouge will be in a good position to meet the emerging market needs in high-performance applications.
Basell’s latest generation Avant ZN catalysts now available for polyolefin producers in China
Basell announced the commercialization of its latest generation Avant ZN catalysts in China, addressing customer requests from the country’s expanding polyolefins industry. The first customer to be served will be CSPC, a leading Chinese polyolefin producer.
Together with the latest 4th generation catalysts, Basell is also marketing a range of unique 5th generation catalysts in Asia that can significantly expand polypropylene properties beyond existing standard grades.
According to the company, in every region of the world, polypropylene producers are seeking to improve the performance of their products while maintaining consistent quality and competitive economics. In the fast-growing Chinese market, Basell can meet customers’ increasing demands for improved impact copolymers through the superior morphology and porosity of Avant catalysts, which produce resins with up to 40 percent rubber content.
Avant ZN is Basell’s trademark for the most widely used catalysts in the polypropylene industry. The Avant ZN family of catalysts can be used for the production of polypropylene homopolymers, random and heterophasic copolymers, and can be used in gas-phase, slurry, and bulk technology. Avant catalysts’ high activity and superior morphology allow good operational stability, consistent production, and a wide range of product capabilities.
Comments: There is a lot of expansion/new capacities coming on-stream in China. By making the catalysts available locally, Basell will be well-placed to take advantage of the growing markets.
Mitsui Chemicals to expand COC production
Mitsui Chemicals announced its plans to establish a new plant to increase production capacity for APEL™, an amorphous cycloolefin copolymer with outstanding optical features.
The new facility will be built at MCI Osaka Works – Takaishi City, Osaka Prefecture with a production capacity of 3,000 tons per year. The total investment will be about ¥6 billion and the plant will start commercial production in May 2008.
APEL™ is a highly refractive and low birefringent material, mainly applied to information and electronic materials such as pick-up lenses for DVD recorders and lenses for camera phones, where demand has been dramatically growing. And recently, APEL™’s application has been expanded into highly marketable high-grade packaging materials, including PTP (Press Through Package: package for tablet pharmaceuticals) and shrink films, thanks to their moisture-proof and contractive characteristics, respectively.
MCI will build an R&D facility in the new plant to develop new applications for the material, enhance production technology and strengthen marketing capacity.
Under the newly developed Grand Design (the basic framework of the MCI group management), MCI established its new corporate target (“‘Chemistry, Innovation, Dreams’~ The Mitsui Chemicals Group is Constantly pursuing innovation and materializing dreams with the wonder of chemistry~.”) and its Long-term Management Target. To realize these new goals, MCI has made a fresh start with a new business portfolio (Performance Materials Business, Advanced Chemicals Business, and Basic Chemicals Business) MCI will further expand and grow businesses for APEL™, one of its business focuses in information-electronics business, by fully taking advantage of the augmentation. Information-electronics business is a core of the Performance Materials Business Sector.
Comments: Cyclic Olefins Copolymers are engineering thermoplastics, which offer unique properties that are critical to medical, optical, and packaging applications. There are two producers of COC: Topas Advanced Polymers (Topas), Germany, and Mitsui Petrochemicals, Japan. Topas has a capacity of around 30KT and Mitsui with a capacity of 3.3 KT. Mitsui has increased capacity incrementally with several expansions.
Low birefringence, surface replications, and transparency to blue-green laser make COC the ideal resin for higher-capacity Blue ray laser DVDs. In addition, recently, there is a very high demand for high-capacity DVDs like Blu-ray laser DVDs for higher data storage. Some of the electronics company like SONY has already launched Blue Disc and are experiencing high demand for these DVDs. These DVDs are considered next-generation Compact Discs. COCs are also used for LCDs in iPods, TV, and Mobile phones. Therefore, to meet this fast-growing demand for optical applications, it is sensible for Mitsui Petrochemicals to increase the capacity for its APEL® grade Cyclic Olefins Copolymer. COC is expected to grow at 5.2% for the next five years, due to an increase in demand for its optical applications along with medical and packaging applications. Other competing materials such as COP (Cyclic Olefins Polymer), are also taking steps to replace optical applications of COC, however, time will tell how successful it is the replacing the COC and other similar polymers.
ExxonMobil Chemical introduces a new softer Santoprene TPV that provides a strong bond to ETPs
ExxonMobil Chemical has introduced a new softer version of the Santoprene™ thermoplastic vulcanizates (TPV) that bonds with engineering thermoplastics (ETPs). Santoprene TPV 45 B100 is the latest addition to ExxonMobil Chemical‘s rapidly expanding bonding portfolio which now includes 25 Santoprene TPV grades that bond with ETPs, nylons, metals, and various polyolefins.
According to the company, they had specific requests from OEMs and product designers in the computer peripherals, cell phone, personal care, and stationery products sectors for an even softer, more tactile version of the Santoprene TPV grades that bond with ETPs.
This new softer Santoprene TPV has been designed for applications that require a very soft touch feel and strong bonding to ETP materials including polycarbonate (PC), acrylonitrile butadiene styrene (ABS), acrylonitrile styrene acrylate (ASA), acrylic (PMMA) and polyethylene terephthalate (PET). An advantage of this Santoprene TPV grade is its processing performance. With good mold design, better-looking components can be produced with fewer flow marks. This softer Santoprene TPV retains its high-quality performance properties in various environments including hot air, oil, and aqueous solutions. Properties include long-term sealability and high bond strength to extend the product lifetime; a durable slip-resistant, soft touch feel; chemical resistance; and, minimal high-temperature deformation.
In over-molding applications, the new grade eliminates the need for adhesives, bonding agents, and physical or mechanical interlocks. This reduces processing steps which can improve product development cycle times and reduce system costs. Additional benefits include easy colorability, design flexibility, and improved appearance.
Comments: Thermoplastic vulcanizates (TPVs) were first commercialized by Monsanto in 1981 under the trade name Santoprene®. TPVs are essentially TPOs where the elastomeric/rubber phase has been crosslinked using peroxides or silane-grafting during the dynamic vulcanization process. TPVs are commonly used in the following major applications: (1) automotive, (2) Molded goods, (3) wire, and cable, (4) gasket and sealants, (5) hoses & tubes, (6) medical, and others. The current demand for TPV in North America is 145 million pounds and is growing at close to 8% and is expected to continue for the next 5 years.
Overmolding of elastomers onto hard plastic has been the trend in recent years. This process provides various advantages including improving aesthetics, providing weather seals, dampening noise and vibration, protecting against impact, and providing insulation against heat or cold.
ExxonMobil’s introduction of its new grade of Santoprene will allow it to increase its market on over-molding applications and parts with better performance properties.
PQ Corporation sold to Carlyle Group
CCMP Capital Advisors, LLC, on behalf of J.P. Morgan Partners, LLC, has reached an agreement for The Carlyle Group to acquire Niagara Holdings, Inc., the parent company of PQ Corporation (“PQ”). PQ is a leading producer of specialty inorganic chemicals, catalysts, and engineered glass products. The transaction value is approximately $1.5 billion.
Affiliates of JP Morgan acquired PQ in February 2005. In August 2006, the buyout and equity growth investment professionals of JPMP formed CCMP Capital and have continued to manage this investment on behalf of JPMP.
Pursuant to the Merger Agreement, PQ has agreed to use its commercially reasonable efforts to discharge all of its outstanding senior subordinated notes issued pursuant to the Indenture dated February 11, 2005, between Niagara Acquisition, Inc. (now known as PQ Corporation) and Wells Fargo Bank, National Association (the “Indenture”) by either conducting a tender offer for the Notes or effecting the redemption of the Notes by the terms of the Indenture.
The transaction is expected to close in the third quarter subject to regulatory review and customary closing conditions. Lehman Brothers and J.P. Morgan Securities Inc. are financial advisors and Latham & Watkins LLP is legal counsel to PQ. The Carlyle Group was advised by UBS Securities LLC and Debevoise & Plimpton LLP.
Comments: It seems that the “merger/acquisition” game is active in 2007. We just reported the news on GE Plastics being acquired by SABIC. Not too long ago, it was Huntsman Polymers was purchased by Koch Industries. Now it is PQ Corporation and its parent company – Niagara Holdings Inc., being bought out by a private equity firm – The Carlyle Group. In a way, this is good news for PQ Corporation and its employees getting out of uncertainty to focus on the business growth plan/strategy with the support of new management.
PQ Corporation – founded in 1831 and known as the Philadelphia Quartz Company from 1864 until 1978, recently acquired by JPMorgan Partners, is a leading producer of silicate, zeolite, and other performance materials serving the detergent, pulp and paper, chemical, petroleum, catalyst, water treatment, construction, and beverage markets. It is a global enterprise, operating in 19 countries on five continents, and along with its chemical businesses, includes Potters Industries, a wholly owned subsidiary, which is a leading producer of engineered glass materials serving the highway safety, polymer additive, metal finishing, and conductive particle markets. It had $700 million in sales last year and operates 60 manufacturing facilities in 19 countries on five continents. It employs 1,856 people.
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