A. Schulman Inc. is venturing into Saudi Arabia though a 50-50 joint venture with National Petrochemical Industrial Co. (NATPET).
Fairlawn, Ohio-based Schulman is investing about $14 million in the venture, which will build a polypropylene compounding plant in Yanbu, Saudi Arabia. Construction of the plant and related expenses are expected to total $70 million. The plant will use Schulman technology and is expected to open by the end of 2014.
“Several aspects of this deal will accelerate A. Schulman's expansion and visibility in its priority growth markets of Africa, India and the Middle East,” Schulman executive Bernard Rzepka said in a June 11 news release. Rzepka serves as general manager and chief operating officer of Europe, Middle East and Africa for the firm.
The project “supports the Saudi government's program in developing downstream projects and adding value to the intermediary petrochemical production” in the country, NATPET President Jamal Maliakah added in the release.
Schulman previously had served customers in the Middle East from its plants in Europe. Late last year, the compounder opened a regional sales office in Ras al-Khaimah, United Arab Emirates, to handle higher customer activity.
NATPET operates almost 900 million pounds of combined capacity for PP and propylene feedstock at its plant in Yanbu. The site makes PP using Spheripol-brand technology licensed from LyondellBasell Industries NV.
NATPET is based in Jeddah, Saudi Arabia, and is a unit of Alujain Corp., which has investments in petrochemicals, mining, metals and energy. Saudi conglomerate Xenel and the state-owned General Organization for Social Insurance also own stakes in NATPET.
No production capacity or job totals were available for the new compounding plant. Compounds made there will be sold into automotive and other industrial applications.
Schulman — which ranks as one of North America's 30 largest makers of compounds and concentrates — hopes to benefit by being more directly aligned with a resin maker in the region.
“This isn't only a geographic expansion,” spokesperson Jennifer Beeman said June 15. “It also allows us to play more profitably in the broader [PP] market at a more profitable pace, instead of just being a niche business.”