Solvay to grow in Brazil, sale of Indupa PVC asset near, says exec

Bob Moser
PLASTICS NEWS CORRESPONDENT

Published: December 6, 2013 10:02 am ET
Updated: December 6, 2013 10:04 am ET

Related to this story

Topics Materials, Mergers & Acquisitions, Materials Suppliers, Latin America
Companies & Associations Solvay SA

SÃO PAULO, BRAZIL — Belgium’s Solvay SA is revising its portfolio while pursuing organic growth and acquisitions following the integration of Rhodia SA this year. The plan that includes expanding in niche markets in Brazil where it’s strongest, while divesting from local operations like PVC where profits have disappointed.

“We’re getting out of businesses where other companies can do better than Solvay, and boosting our presence in areas where we are, or can be, stronger,” Gilles Auffret, executive committee member of Solvay Group and former chief operations executive at Rhodia, told Brazilian newspaper Valor Economico.

As part of that strategy, Solvay announced in early October a $1.3 billion purchase of U.S.-based Chemlogics, a supplier of chemicals for the oil and gas industry, allowing the group to double its operations in the field. It also put Brazil- and Argentina-based PVC producer Solvay Indupa up for sale earlier this year, and announced plans to set up a joint venture with INEOS in Europe.

The April 2011 purchase of Rhodia for $4.8 billion provided Solvay a stronger presence in Brazil. Its investments in Brazil over the past six years have totaled $360 million, or roughly $60 million per year. That pace should continue in the coming years, Auffret said.

“Rhodia has been present in Brazil for 94 years, we can say that it is almost a French-Brazilian company,” he said. “We are optimistic about the future.”

Use of biomass as a feedstock for chemicals and power generation has “entered the radar” of the group in Brazil, Auffret said. Traditional businesses like textiles and engineering plastics, where Rhodia has a strong market presence, will remain in the local portfolio, he added.

Rhodia announced a deal in August with GranBio to produce biochemicals in Brazil from renewable sources, primarily bio n-butanol, for applications in the paint and solvent industries. That project is still under study, Auffret said, but could start operations by 2015. Rhodia has already invested between $60 million and $70 million in a biomass project in Brotas, São Paulo state.

Solvay Indupa has two PVC plants producing resin for the production of pipes and fittings, based in Santo André, Brazil, and Bahia Blanca, Argentina, with combined production capacity of more than 1 billion pounds per year.

Brazil’s Braskem and Mexico’s Mexichem have confirmed interest in recent months in purchasing the Indupa assets, which could go for between $600 million and $800 million, according to sources cited by Valor Economico.

Latin America represented 10 percent of Solvay Group’s 2012 sales, or 14 percent if Solvay Indupa is included. The group plans to finalize the sale of its 70 percent majority share in Indupa “as soon as possible,” said Auffret, citing progress with interested buyers.

In the company’s third quarter financial report released in October, Solvay noted that results regarding Solvay Indupa were included in the “discontinued operations” segment, a sign that a sale may be near. The decision to sell the South American PVC business is part of the group’s strategy to get out of areas where other companies can do better.

“The PVC business was not as profitable as we expected,” Auffret said.


Comments

Solvay to grow in Brazil, sale of Indupa PVC asset near, says exec

Bob Moser
PLASTICS NEWS CORRESPONDENT

Published: December 6, 2013 10:02 am ET
Updated: December 6, 2013 10:04 am ET

Post Your Comments


Back to story


More stories

Image

PP prices rise, solid PS, PET drop

October 30, 2014 1:15 pm ET

North American polypropylene resin prices surged again in October, while regional prices for solid polystyrene and PET bottle resin continued their...    More

Image

Italian compounder opening first US plant

October 30, 2014 9:45 am ET

The song of the South has led Italian compounder So.F.Ter Group to open its first plant in the United States in Lebanon, Tenn.    More

Image

Xten may shut down, working on sale to Commercial Plastics

October 29, 2014 5:49 pm ET

Xten Industries LLC is working on a sale to Commercial Plastics Co. of Mundelein, Ill. Xten, an injection molder based in Kenosha, Wis., filed a...    More

Image

Ineos closing Barex plant, exiting business

October 29, 2014 3:58 pm ET

Materials maker Ineos Group is closing its only global Barex-brand polyacrylonitrile (PAN) resin plant in Lima, Ohio. Ineos – based in Rolle,...    More

Image

DSM picks Augusta, Ga., for nylon plant

October 29, 2014 11:49 am ET

Materials firm Royal DSM NV has chosen Augusta, Ga., as the site of its new North American nylon resin plant.    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events