The Chatterjee Group to Pull out of Basell Deal
The Chatterjee Group has pulled out of the Basell acquisition. Access Industries will buy Basell through its Nell acquisition unit for $5.2 billion, including debt.
BASF and Shell said that they agreed to sell Basell to a group led by Access, which included the Chatterjee group. Chatterjee had planned to raise money for the purchase by pledging assets of India’s Haldia Petrochemicals Ltd, which it owns with the provincial government of West Bengal.
According to Access Industries, neither the Chatterjee group nor Haldia Petrochemicals are currently participating in the transaction.
Comments: BASF, Shell, and Access Industries initially signed the sale agreement. The Chatterjee Group (TCG) was never directly involved in the sale but had some agreement with Access Industries. TCG in turn had an agreement with Haldia Petrochemicals that would allow the company to invest 10% of capital in the deal. However, it seems that due to a difference of interest between the West Bengal government and TCG, TCG was not able to raise money by hedging Haldia Petrochemical’s assets.
The likelihood of this impacting the deal is very low. Access Industries will have to mitigate some concerns regarding the deal. The major concerns include: (1) Is Access Industries looking for new partners to raise capital?, (2) Will there be a need to renegotiate the price?, and (3) Is there a need for more time to close the deal/raise money? It is believed that all these questions will be answered shortly by the entities involved in the transaction.
Braskem selects Basell’s Spheripol® process for PP
Braskem S.A. announced the selection of Basell’s Spheripol Process for a new 300 KT per year polypropylene plant to be operated by a joint venture between Braskem and Petrobras Química S.A. at Paulínia, State of São Paulo, Brazil. The start-up is planned for 2007.
Braskem already operates 550 KT per year of PP capacity based on the Spherical technology at its industrial complex in Triunfo, Brazil. More than 90 Spheripol process plants with a combined capacity of more than 17 million tons per year have been licensed worldwide, including five plants in Brazil.
The latest-generation Spheripol technology is fully compatible with both 4th and 5th-generation catalyst families, including Basell’s Avant ZN diethers and succinate catalysts.
Comments: With 13 industrial facilities located in Alagoas, Bahia, São Paulo, and Rio Grande do Sul, Braskem produces primary base petrochemicals (ethylene, propylene, benzene, caprolactam, DMT) and thermoplastic resins (polypropylene, polyethylene, PVC and PET). The company reported annual sales of about US$6 million with production volume reaching 5.7 million tons. Braskem is a key polypropylene player in South America. The company believes that there is a tremendous opportunity for polyolefins and other thermoplastics in the region especially when one compares per capita consumption. The petrochemical chain in Brazil represents 8% of industrial profit with an annual turnover of US$ 17 billion. Braskem has chosen to continue to license from Basell. According to the company, Basell provides the latest technology developments in process and catalysts for PP production, enabling Braskem to stay competitive and providing opportunities to differentiate their products.
Statoil sells its 50% stake in Borealis to IPIC of Abu Dhabi and OMV of Austria
The International Petroleum Investment Company (IPIC) of Abu Dhabi and OMV Aktiengesellschaft of Austria have announced their agreement to purchase Statoil’s 50% shareholding in Borealis A/S. As a result, the new Borealis ownership will be 65% IPIC and 35% OMV. Statoil will continue as a major long-term feedstock supplier to Borealis.
According to IPIC, its increased ownership in Borealis will further deepen the ties between Borealis and Borouge providing an even stronger foundation for continued growth in the Middle East and Asia.
Statoil has sold its interests in petrochemicals because this no longer forms part of its core business. The sale to IPIC and OMV also represents a good industrial solution for Borealis.
Comments: Borealis was formed in 1994 when Neste and Statoil merged their petrochemicals and polyolefins business. Borealis’ first Middle East joint venture was in 1996, when The Abu Dhabi National Oil Company (ADNOC) chose Borealis for a joint venture to build and operate a world-scale petrochemical complex using Borstar technology, at a site on the U.A.E. coast. In 1997, Borealis acquired PCD Polymere from the Austrian oil and gas company OMV and Neste sold its 50% shareholding in Borealis equally to OMV and the International Petroleum Investment Company (IPIC) of Abu Dhabi. OMV and IPIC equally owned a 25% stake in Borealis.
Borealis historically remained an all-European organization with employees derived from all the nations. Borealis was very open to ideas of cooperation and Global technology joint ventures. It is safe to say, there is no major polyolefin organization in the world that has some time or other discussed joint venture cooperation and/or a joint Another Unique Service From Chemical Market Resources, Inc. 560 Blossom Street, Ste C, Houston, TX 77598 USA; Tel: 281-557-3320 Email: POE-SNA@CMRHouTex.Com Copyright © 2005 Page 4/18of Issue 14 – Volume 3 development program with Borealis. After this recent acquisition, OMV and IPIC will own a 100% stake in Borealis. Before this, IPIC had a 25% stake, which is now increased to 65%, and OMV increased its stake from 25% to 35%.
Borealis is a significant subsidiary for OMV in terms of the value chain and outlet for its olefins-related products. Borealis processes around 85% of the petrochemical products produced by OMV. Borealis has a competitive position in the Middle East via its Borouge plastics production site in Abu Dhabi. Hence this acquisition by IPIC and OMV was strategic for both the investors as well as for Statoil.
Israel’s Carmel Olefins to invest $315 million in PP expansion
Israel’s Carmel Olefins has approved an additional investment in the expansion of Carmel Olefins’ polypropylene plant. The investment has been increased from the original $245 million to $315 million. The company will increase the capacity of the existing plant from 200,000 MT/year to 450,000 MT/year.
Carmel is Israel’s only producer of ethylene, polyethylene, and polypropylene. Approximately 70% of total PP production would be sold in the local market and the remainder exported to Europe, primarily Britain, Italy, and Turkey. Carmel is jointly owned by Oil Refineries Ltd and Israel Petrochemical Enterprises.
Comments: As noted in a previous PO&E SNA issue, Carmel Olefins is jointly owned by Oil Refineries Ltd. (ORL) and Petrochemical Enterprises Ltd., and is engaged in the production of LDPE and PP. Carmel Olefins had initially announced plans to expand its PP facility from 200 KT to 250 KT to keep pace with demand. The size of the project has recently been expanded to 400 KT. The total investment will be increased from $245 million to $315 million.
Financing for the construction is nearly approved. The company has signed or is in the advanced stages to finalize $110-120 million in financing contracts with foreign banks and an additional $150 million with Israeli banks.
Borealis to invest EUR 36 million to increase Nordic olefins capacity
Borealis announced it will invest EUR 36 million in expanding its olefins unit in Porvoo, Finland for completion during a planned turnaround in 2007.
With this investment, ethylene capacity will increase from 330,000 tons/year to 380,000 tons/year and propylene capacity from 200,000 tons/year to 223,000 tons/year. This investment strengthens Borealis’ market position and competitiveness in the Nordic countries and Russia.
The consumption of steam and electricity will decrease by about 4% per production ton. In addition, the VOC emissions from the olefins plants will decrease. Process safety of the plants will be improved with the installation of new equipment based on new technology.
Comments: This is a regional incremental de-bottlenecking type of project. The ultimate yield of 50,000 tons (100 million pounds) of ethylene will undoubtedly be used on-site in conversion to polyethylene. In the past Borealis has imported ethylene monomer to keep their derivative polymer units full. Although the project is small, it is the trend for developed market producers over the past several years (unlike the Middle East and China where grass-roots facilities are being built) to optimize existing capacity rather than build new plants. With the feedstock cost issue, the risk of incremental expansions is much smaller when more market capacity is needed.
The cost of this project at about $40 million is a big advantage also. Incremental capacity costs are sometimes less than 1/3rd the new cost of ethane crackers’ capital in the Middle East so the payout is quick.
Feedstock costs at Porvoo are regionally competitive because of the Scandinavian production of large quantities of natural gas, so this investment will show an advantage. There are also announced cost improvements with this project.
Russian company Novatek produces BOPP films in Russia
Russia’s largest independent gas producer Novatek has launched a plant to produce polypropylene film with an investment of EUR50 million in the Novokuybyshevsk in the Samara Region. The plant’s production capacity is 25,500 MT/year of film. Basell is the main supplier of raw materials for film production.
Comments: This is the first of the five BOPP plants planned in Russia. This project was announced in 2003 by NOVATEK. It was followed by the Euromet Group, the Grinn Corporation, Marta Trading, and Production Co., and Mosimpex Service Ltd. Grinn Plastik launched BOPP-film production in February when it opened its facility in Kursk. Grinn Plastik plant will produce a three-layer BOPP film of all types (transparent, metalized, and pearl) of thickness ranging from 10 to 80 microns. The capacity for the film is 35 thousand tons. The plant is planned to have two lines of 17,500 tons capacity each. The second line is planned to come on-stream in November 2005.
In July 2005 Biaxplen Ltd., a branch of JSC Mosimpex Servis Ltd. Plans to put into operation its BOPP-line producing line. The new plant will be set on the base of the property complex of the former JSC Balakhninsky reinforced-concrete products plant.
Biaxplen started working on this project in August 2004. The planned production for the plant is 16,560 tons. Currently, Russia imports a third of its polypropylene film from Germany, Hungary, the U.K., and other non-CIS countries. Russia’s dependence on imports will be minimal if all the projects are completed. It seems the first announced project is completed with the launch of this facility. Now there are four more to go.
ExxonMobil Chemical to shut down BOPP plant in Stratford
ExxonMobil Chemical Co. announced that it will shut down its Stratford, CT plant within two years, resulting in about 100 immediate layoffs.
According to ExxonMobil spokesman, the company has to close one of its three factories in the United States because of a glut in the market for the factory’s product. About 100 workers lost their jobs, while 63 remain, and the company will gradually phase out work in Stratford and sell the plant, which has operated for 30 years, by the middle of 2007.
Comments: ExxonMobil is one of the largest producers of BOPP films in North America as well as globally. On a global basis, ExxonMobil has a total BOPP film capacity of 290 KT. In North America, ExxonMobil has approximately 130 KT of BOPP film capacity. The capacity in the United States is distributed between three locations: (1) Shawnee, OK, (2) Stratford, CT, and (3) La Grange, GA. The BOPP film market has been growing on a global basis but the capacity growth has outpaced the growth in demand. There is substantial BOPP film capacity in China and new capacity is being added at a rapid pace in Russia. The newer BOPP lines are highly cost-competitive and ExxonMobil seems to be positioning itself to compete with the new capacity additions. The major markets of BOPP films for ExxonMobil in North America include food packaging, industrial applications, and others.
Taiwan’s Formosa Plastics group plans new PVC plant in Texas
Formosa Plastics group announced its plans to invest $200 million through its US subsidiary in the construction of a new PVC plant in Texas.
The new site is projected to have an annual capacity of 170,000 metric tons of PVC, which will raise the group’s global PVC capacity to a total of 2.96 million tons a year.
Comments: Formosa had to shut down its PVC plant in Illiopolis, IL following an explosion in 2004. The demand for PVC mainly in rigid applications has gained momentum and hence the company has decided to construct another plant in Texas. Formosa Plastics is the third largest producer of PVC in North America behind OxyVinyls and Shintech.
For more information, please refer to our biweekly news analysis, Global PO&E, Volume 2, Issue 09.
Kaneka to construct chlorinated PVC plant in the US
Kaneka announced its plans to construct a chlorinated polyvinyl chloride (CPVC) plant in the US. The company will complete a 20,000 MT/year plant as early as mid-2007.
In its chemicals business, Kaneka is promoting a strategy to build a solid business base little influenced by fluctuations in market conditions through expansion of its specialty PVC business, which boasts high added value. U.S.-based manufacturing of CPVC is part of this strategy and in the future, Kaneka is also likely to look at manufacturing other specialty PVC products in the U.S. besides CPVC, such as PVC copolymers and PVC paste.
The location of the CPVC facility is not yet decided. Compared with competing materials such as steel pipe and polyethylene pipe, the cost advantage of CPVC in the US and the Middle East is becoming increasingly higher, and readily processable CPVC pipes are being focused on, with demand for them expanding.
Comments: CPVC is used in the manufacture of hot water piping and sprinkler systems. In 2000, California allowed chlorinated PVC for use in residential plumbing and since then the demand for CPVC has increased.
The demand for CPVC in the US is about 400 million pounds and is expected to grow at about 3-4% for the next five years. The major producers of CPVC include Noveon, Arkema (formerly AtoFina), and others. Crosslinked polyethylene has been under environmental pressure in the US and hence this might be the right time to expand CPVC capacity for competing applications.
Swiss company, Quadrant to acquire UHMW-PE processor Poly Hi Solidur
Swiss firm Quadrant announced its plans to acquire ultra-high molecular weight polyethylene (UHMW-PE) processor Poly Hi Solidur in an $85 million (EUR70 million) deal.
The purchase price – $82 million (EUR67.5 million) in cash plus the assumption of $3 million (EUR2.5 million) of capitalized leases – will be financed from existing liquid funds and by a EUR 58 million increase in bank borrowings. Poly Hi Solidur has production facilities in the US, Germany, France, the UK, Japan, and South Africa. It has 1,000 employees and posted sales of $169 million in 2004.
Comments: This acquisition of Poly Hi Solidur will give Quadrant a significant advantage in UHMWPE processing.
This acquisition is very timely as UHMW PE producers have also committed to increasing capacity in response to growing demand. This acquisition doesn’t just fill a gap in Quadrant’s product family; it does so with the global leader in this field.
Poly Hi Solidur was currently owned by Wisconsin-based Menasha Corp since 1973, and the company was looking for a potential buyer since 2004. Poly Hi is a major producer of machinable industrial parts such as gears, bearings, and liners for tanks and silos.
Brazilian polyolefin producers to invest in nanocomposites R&D
Brazilian polyolefins producers Polibrasil & Braskem have announced their plans to invest in nanocomposites-related R&D. Polibrasil has joined the nanotechnology research of the Sao Paulo state universities Unicamp, UF Sao Carlos, and USP to develop polymers embedded with nanoparticles.
The company has two products in the pipeline soon to be launched after investments of US$20 million, one of them a resin for the manufacturing of bumpers for the automotive industry, and another to manufacture packaging. Orbys, a company incubated at USP also plans to launch nanotechnology-based packaging materials by mid-2006.
Another petrochemicals producer, Braskem also announced that it has two focuses to implement nanotechnology in its plastic resins production process: diverse applications for plastic resins, and a specific study for polyethylene nanocomposites.
Brazilian petrochemicals manufacturer Braskem also informed it has used its nanotechnology experiences center in the automobile, consumer electronics, and packaging segments, among others.
Comments: Nanotechnology is becoming the contemporary gold rush all over the world, from the US to Europe, from China, Japan to Brazil, and Mexico.
Governments are investing millions, if not billions, of dollars in related research projects; universities are carrying out all kinds of nanotechnology research; venture capital is flowing into nanotechnology areas; startup companies mushroomed like the dot. coms. There is no doubt about the unique and superior properties of nanomaterials compared to conventional materials in many cases. Nanomaterials have been commercialized in applications such as automotive and packaging. The questions are how much nanotechnology would be proven to be commercially valuable, and how many companies would eventually be able to make a profit out of it. The rule of thumb in venture capital investment is one success out of every 7-10 investments. The key here is to make sure you understand where are the real market needs and how would the nanomaterials be made in large quantities at an acceptable cost.
European Parliament votes to ban six phthalate plasticizers in toys
The European Parliament voted to make permanent the temporary ban on the use of three phthalate plasticizers and restrict the use of the other three in toys.
DEHP, DBP, and BBP are banned in children’s toys and childcare items. DINP, DIDP, and DNOP will be banned from use in items that can be placed in a child’s mouth. The temporary ban had been in place since 1999.
Only one of the six plasticizers, DINP, is generally used in toys. An EU scientific risk assessment, conducted by technical experts from the member states, said that children were not at risk from DINP in toys. A similar study in the US by the Consumer Product Safety Commission reached the same conclusion.
Comments: In Europe, there was a temporary ban since 1999 on the use of six phthalates as PVC plasticizers in soft toys. The six phthalates that are banned by the EU include: (1) di-isononyl phthalate (DINP), (2) di-2-ethyl hexyl phthalate (DEHP), (3) di-n-octyl phthalate (DNOP), (4) diisodecyl phthalate (DIDP), (5) butylbenzyl phthalate (BBP) and (6) di-butyl phthalate (DBP).
This temporary ban has now been made permanent. The impact of this ban has already been seen in Europe. Recently, BASF decided to discontinue the production of DEHP. Phthalate plasticizers are the most commonly used plasticizers. They account for about 80% of the global plasticizer demand. The other types of plasticizers include: (1) aliphatic plasticizers (adipates, maleates, azelates, and sebacates), (2) trimellitate plasticizers, (3) epoxy plasticizers, (4) phosphate plasticizers, and others.
Cargill & Codexis progress on the manufacture of plant-based chemicals
Cargill and Codexis Inc. have made progress in the development of plant-based intermediate chemicals. The companies have announced a breakthrough in developing a novel microbial process that will convert corn sugar to 3-hydroxyproprionic acid (3-hp) using proprietary technology from Codexis. Currently, there is no commercially viable production of 3-hp by either chemical or biological means.
Key chemicals that can be produced from 3-hp include acrylic acid, 1,3-propanediol, and acrylamide, which are used in large quantities for adhesives, polymers, plastic packaging, and resins.
If successful, the new process will allow the production of these materials at a cheaper cost and with less environmental impact in terms of energy consumption, waste generation, and carbon dioxide formation.
Comments: Cargill has been working on the development of bio-based polymers and chemicals over the last few years. The company has had a great deal of success in developing and commercializing polylactic acid-based biopolymers. Based on its experience, the company is venturing into the development of plant-based chemicals.
Idemitsu develops liquid higher olefin using a metallocene catalyst
Idemitsu Kosan has developed liquid higher olefin using a metallocene catalyst. While this new substance is a higher olefin having 20 or more carbon atoms, being a liquid at room temperature it can be used at low temperatures and has low volatility, and is capable of undergoing a variety of different modifications, such as epoxidation.
Idemitsu plans to market the product for several applications including adhesives and paints which comply with VOC restrictions, surfactants that can be used under low temperatures, and high-performance synthetic lubricants such as a substitute for polyalphaolefin (PAO).
The company plans to further develop the market and start sales on a contract production basis around 2006, after which it will consider constructing a facility for in-house production.
Comments: Alpha olefins with a carbon number of 20 or more, although possessing superior environmental and safety characteristics of high boiling and ignition points tend to solidify at ambient temperatures making them less desirable for use at low temperatures.
The latest metallocene development by Idemitsu Kosan enables them to produce higher alpha olefins with (1) low-temperature fluidity, (2) high purity compound without any low boiling point impurities, (3) the olefin possesses reactivity, and so permits various alterations by addition reactions such as epoxidation, (4) product viscosity relatively independent of temperature, (5) molecular structure control means there is little branch structure, enabling high levels of biodegradability and oxidation stability, and (6) little odor, and is clear and colorless. The company hopes to further develop compounds for (1) adhesives and coatings, (2) surfactants that can be used at low temperatures, and (3) PAO substitutes and other high-function synthetic lubricants.
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