The status of Mexico's Phoenix Project is in limbo, as a top government official said last week it was canceled, but that statement was recanted the next day.
Mexico's plastic industry and government officials have been planning Phoenix for years, touting it as a way to decrease processors' dependence on imported resin. The most recent plan calls for a joint venture including state oil monopoly Petroleos Mexicanos (Pemex), Indelpro SA de CV, Grupo Idesa SA de CV, and Pittsburgh-based Nova Chemicals Corp. The project's initial construction would include an ethylene cracker and a pair of polyethylene plants in an undecided location in Mexico by 2009.
On July 11, Rafael Beverido, head of Pemex's petrochemicals unit, was quoted in the media assaying the project was canceled because the secretary of finance, Francisco Gil Díaz, refused to sell feedstock for less than market prices.
That initial report was denied first by the minister of energy, Ernesto Martens Rebolledo, later that same day, and then by Eduardo Sojo Garza Aldape, spokesman for Mexican President Vicente Fox, on July 12 after having met with Rebolledo, Díaz, and Pemex President Raúl MuÃ±oz Leos. Both of the rebuttal announcements claimed that Phoenix will be undergoing further analysis.
According to Chemical Market Associates Inc. of Houston, Mexican polyolefin imports were up to 3.8 billion pounds in 2004. Mexico imports almost 60 percent of its petrochemical products.
The crux of the Phoenix fracas seems to be the price of feedstock, said Mexico City-based consultant Eduardo de la Tijera. The ministry of the treasury is refusing to approve a 15 percent discount for feedstock.
Beverido said that would qualify as a subsidy of $300 million, and other industrial sectors would seek similar handouts if it were awarded.
CMAI consultant Howard Rappaport said any analysis of Phoenix's condition might be hasty.
``At this point, no one knows the status of Phoenix. The final determination will be made by the partners and the Mexican government. You have to see when the dust settles,'' he said in a phone interview July 14.
At least one partner, Nova, has no new information on Phoenix.
``We are aware of the reports in the media. We have received no notification from Pemex about the status of the project,'' said Nova spokesman Greg Wilkinson.
Meantime, on July 15, Nova and Grupo Idesa revealed their own joint venture, Novidesa SA de CV, which will distribute Nova's solid and expandable polystyrene in Mexico, beginning in September.
``This is a completely separate project [from Phoenix],'' Wilkinson said.