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Braskem outlines potential Mexico expansion

By: Stephen Downer

October 22, 2012

Brazilian giant Braskem SA may build its second petrochemical complex on Mexico’s Gulf Coast within a decade, said a senior 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 on the Gulf of Mexico.

Mexican petrochemical company Grupo Idesa SA de CV is Braskem’s partner in a project scheduled to begin operating 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, based 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,” which includes “testing clients” and “improving our knowledge of the Mexican market,” the Brazilian official added

Ethylene XXI “represents the reactivation” of the petrochemicals industry in Mexico, according to Leite. Idesa is Mexico’s fifth-largest petrochemicals company, with sales in 2011 of $625 million, 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 spoke at a convention of Mexico’s plastics industry group, Anipac (Asociación Nacional de Industrias del Plástico AC).