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Braskem official highlights expansion potential in Mexico

By: Stephen Downer

October 11, 2012

GUANAJUATO, MEXICO (Oct. 11, 1:30 p.m. ET) — Brazilian giant Braskem SA may build its second petrochemical complex on Mexico’s Gulf Coast within a decade, according to a senior company official.

Braskem, Latin America’s largest petrochemical company, owns 65 percent of a joint venture that is constructing a petrochemical complex, including an ethylene cracker and three polymerization plants, in Coatzacoalcos, Veracruz state, in the Gulf of Mexico.

Mexican petrochemical company Grupo Idesa SA de CV is Braskem’s partner in a project scheduled to go on stream in 2015. Idesa owns the joint venture’s remaining 35 percent.

“We believe this project could be the first of others” in Mexico, Cleantho Leite Filho, Braskem Idesa’s commercial and business development director, told a plastics industry conference in late September.

“We know a country like Mexico will present many other opportunities. We think that if Mexico continues [to grow] like this, in the next five, seven, 10 years we could build another plant in the Gulf of Mexico.”

Braskem, headquartered in São Paulo, is also “considering other projects in Bolivia, Peru and Venezuela,” he added, without giving details as to what they might be.

The Braskem-Idesa joint venture, known as Ethylene XXI, was formalized in March, 2010. Braskem’s investment in it is $3.3 billion, Leite said. The cracker will produce 2.3 billion pounds of ethylene per year, he said, while there will be two high density and one low density polyethylene plants at the complex, where the flattening and preparation of the land is “90 percent finished.”

“We are starting pre-marketing operations,” the Brazilian official added, explaining that that included “testing clients” and “improving our knowledge of the Mexican market.”

Ethylene XXI “represents the reactivation” of the petrochemicals industry in Mexico, Idesa, Mexico’s fifth largest petrochemicals company, with sales in 2011 of $625 million, according to Leite, said in a statement in 2010.

“One of the most relevant positive effects [of the complex] is that Mexico will be able to substitute the importation of polyethylene worth approximately $2 billion a year.

“It will have a strong impact on Mexico’s trade balance, in addition to creating 6,800 jobs during the complex’s construction and about another 800 permanent jobs at the complex, once work is finished.”

Leite was a speaker at the two-day convention of Mexico’s plastics industry association, Anipac (Asociación Nacional de Industrias del Plástico AC).