Even though the ink has yet to dry on its two most recent deals, South American petrochemical giant Braskem SA is looking to add even more to its empire.
We're still looking for selective acquisitions, especially in North America, Braskem's Manoel Carnaúba said at the World Petrochemical Conference, hosted by DeWitt & Co. Inc. from March 24-25 in Houston. Carnaúba serves as executive vice president of basic petrochemicals for São Paulo-based Braskem.
Braskem's recent acquisitions of a majority stake in Brazilian rival Quattor Petroquímica SA and of the polypropylene business of Sunoco Inc. have made it the largest combined producer of PP, polyethylene and PVC in the Americas. Braskem now has $13.7 billion in annual sales, producing 6.7 billion pounds of PE, 6.4 billion pounds of PP and 1.1 billion pounds of PVC at 29 sites.
The company has set a goal of becoming one of the world's five largest petrochemical firms by 2020. It currently ranks eighth.
The Quattor deal added about $2 billion in sales to Braskem, along with 2.3 billion pounds of PE and 1.9 billion pounds of PP at nine plants, all in Brazil. The deal also will give Braskem access to a diverse feedstock supply, scale increase and a strong production chain, Carnaúba said. Quattor also has plant in southeast Brazil, where most of the country's resin consumption is focused, he added.
The Sunoco deal was made for $350 million in cash and gave Braskem its first physical presence in North America, via PP plants in Marcus Hook, Pa.; Neal, W.Va.; and La Porte, Texas, as well as a research and technology center in Pittsburgh. The three PP plants in the deal have combined annual capacities of 2.1 billion pounds and annual sales of about $700 million.
The Sunoco PP plants have very good assets and a good team, and access to the largest system in the world.
As if the Quattor and Sunoco deals weren't enough, Braskem has three other major projects under way, including a 440 million-pound plant making sugar-based PE in Brazil. That project has garnered a great deal of attention as customers look for sustainable solutions and producers look for non-petroleum feedstocks.
Carnaúba said that sugar-based PE made at the plant set to open later this year will be aimed at cosmetics, health care and similar markets.
We don't want to take this polyethylene into supermarket bags, he explained. It's for specialty products where people are willing to pay a little more.
Braskem's sugar-based PE also could be expanded to plants in Europe and Japan, Carnaúba said, but he did not provide details.
Braskem also has major projects brewing in Mexico with Idesa SA, and in Venezuela with Petroquímica de Venezuela, known as Pequiven.
The Mexican project targeted for a 2015 startup is a $2.5 billion investment that would add more than 2 billion pounds of PE. In Venezuela, a $1.2 billion project could add almost 1 billion pounds of PP by 2013, with potential for 2.4 billion pounds of PE by 2014.
At existing plants, Braskem plans to add 460 million pounds of PVC in Alagoas by the end of 2012, and almost 1 billion pounds of PET in Suape. The PET project is in partnership with Petrobras SA.
And while it's tempting to look at that long list of projects as overly ambitious, Carnaúba said they're needed as Brazil continues to modernize. The country's per-capita consumption of PE, PP and PVC in 2008 was less than 51 pounds far below the U.S. average of 167 pounds and the European average of 150 pounds.
Brazil's per-capita total is still very low, even with strong growth in the economy, Carnaúba said. We have a lot of space to fill.
We have 30 million people moving to the middle class and buying their first car, house and refrigerator. It's a huge opportunity for us.
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