Pétromont & Co. LP - a 50-50 joint venture between Dow Chemical Co. and state-owned Ethylec Inc. - will stop polyethylene and ethylene production in Quebec for ``an undetermined period'' beginning April 30.
In a Feb. 12 news release, officials with Montreal-based Pétromont said the closure decision was the result of several factors, including the strong Canadian dollar and difficulty in obtaining petroleum-based feedstock at competitive prices.
``These factors have had a major impact on the company's profitability, and in light of the equally unfavorable conditions affecting the petrochemical sector across North America, Pétromont has no choice but to suspend its operations,'' officials said.
They added that the facilities will be kept intact in case market conditions change or for a potential buyer of the business.
Pétromont has sales of about $750 million and employs a total of 300 at a high density PE plant with 615 million pounds of annual capacity in Montreal East, and an ethylene plant with 655 million pounds of capacity in Varennes.
In a telephone interview, Pétromont's secretary and general counsel, Louis Rail, said the firm relies on feedstocks such as naphtha, butane and propane, which it has imported mainly from global sources. Local oil refineries don't have enough feedstock to meet Pétromont's needs of about 25,000 barrels per day.
Rotterdam, Netherlands-based LyondellBasell Industries AF SCA's decision to close a nearby polypropylene plant contributed to Pétromont's troubles but it was not a deciding factor in the decision to mothball Pétromont, according to Rail. Efforts to sell the freed-up propylene on the U.S. Gulf Coast have proved to be too costly.
Rail said Pétromont hopes to find a buyer for its facilities by next winter because mothballing costs rise in inclement weather.
Officials with Midland, Mich.-based Dow said in December that the firm planned to take a financial write-down on Pétromont because the operation was ``facing a challenging future.''
Pétromont had been considered the cornerstone of Quebec's petrochemical industry. In a news release, Richard Paton - president and chief executive officer of the Canadian Chemical Producers' Association - said his organization ``is losing an excellent company who are key to the future of the petrochemical industry in Quebec.''
``This is a wake-up call for manufacturing in Canada,'' Paton added. ``If Canada wants to keep manufacturing here, we need to rapidly transform the policy environment for investment.''
Counting the Pétromont closing, more than 2 billion pounds of commodity resin capacity has been tagged for removal in Canada during the past 18 months. The list includes:
*440 million pounds of PP capacity operated by LyondellBasell in Varennes.
*c385 million pounds of PP operated by LyondellBasell in Sarnia, Ontario.
*120 million pounds of polystyrene capacity operated by Ineos Nova in Montreal.
*300 million pounds of PS capacity and 220 million pounds of low density PE capacity operated by Dow in Sarnia.
In addition, Dow announced the closing of a PVC feedstock unit in Fort Saskatchewan, Alberta; and A. Schulman Inc. recently said it would shut down a plant making engineering resin compounds in St. Thomas, Ontario.
The above moves will result in the elimination of at least 840 jobs.