Vinyl extrusion major Royal Group Technologies Ltd. plans to make its own vinyl resin by purchasing a plant in Sarnia, Ontario.
Royal of Woodbridge, Ontario, said March 31 it signed a letter of intent to buy PVC production assets from Imperial Oil Ltd.'s chemicals division. Royal agreed to pay about C$82 million (US$57.8 million) in cash for the Sarnia assets. The Sarnia plant has an estimated annual capacity of about 400 million pounds.
Royal will use all the PVC it makes at Sarnia to supply about 70 percent of its resin requirements, estimated Mark Badger, vice president of corporate communications. He said the facility will focus on two vinyl grades and run at capacity to provide ``tremendous efficiencies.'' Under Imperial Oil, the Sarnia plant has made a wide range of rigid and flexible vinyls for Royal and other vinyl processors.
Royal recorded total sales of C$848.7 million (US$598.3 million) for the year ended Sept. 30 for vinyl profiles, siding, window blinds, pipe and other products.
Vic De Zen, Royal's chairman, president and chief executive officer, said in a news release that the vinyl resin plant purchase ``is long overdue.'' It will help his firm develop new PVC products and will supply a new compounding plant in Toronto, which Royal claims will be the largest of its type in the world.
Badger said Royal recently began production at the new compounding facility, which will replace an existing operation and give a net increase in capacity. The operation is designed to hold enough equipment to compound 2 million pounds per day, although Badger did not disclose when Royal will install all the mixing equipment.
Imperial Oil marketing manager W. Bruce Lawson said his firm has been seeking a buyer for the Sarnia PVC plant for several years because it was a noncore business. Imperial Oil, majority owned by Exxon Corp. of Houston, ran the only PVC plant within Exxon worldwide. The Sarnia facility has been making suspension-grade homopolymers since 1966, Lawson said in a telephone interview from Imperial Oil's chemicals unit in Toronto.