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June 23, 2016 02:00 AM

Braskem opens Ethylene XXI, moving ahead on US PP plant

Stephen Downer
Correspondent
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    Stephen Downer
    Braskem SA CEO Fernando Musa, far left, at the opening of the company's Ethylene XXI facility in Mexico.

    Nanchital, Mexico — Brazil's Braskem SA hopes to start awarding contracts to build a U.S. polypropylene resin plant in early 2017, CEO Fernando Musa said June 22.

    “We're doing the engineering now,” Musa told Plastics News. “We're hoping to do the next phase [awarding contracts] early next year. But it depends on how the engineering work goes.”

    If Braskem goes ahead with the project, it will be the first new PP plant in North America since 2003. A plant now owned by ConocoPhillips Co. opened in Linden, N.J., that year.

    Musa, Braskem's CEO since May, spoke after Mexico's Energy Secretary Pedro Joaquín Coldwell officially opened the Ethylene XXI petrochemical complex in Nanchital, on Mexico's Gulf Coast. Braskem has a 75 percent stake in the joint venture and Mexico's Grupo IDESA SA de CV the remaining 25 percent.

    Total investment in the facility was $5.2 billion, the partners said in a news release. That's $700 million more than earlier figures mentioned by Braskem Idesa. The plant could satisfy two-thirds of Mexico's polyethylene demand if none goes to export markets.

    In an emotional speech, Roberto Bischoff, the complex's general manager, told about 1,000 guests that Ethylene XXI “is the biggest investment in the sector in the country for 30 years.”

    It will, he said, attract more plastics processing companies to the area, which borders on Coatzacoalcos, the heartland of Mexico's petrochemical industry.

    The complex has an ethane-based ethylene cracker, two high density PE plants with a production capacity of 750,000 tons a year, a low density PE plant able to produce 300,000 tons a year and a 175 KW cogeneration power plant.

    “I hope this is the first of many projects like this,” Musa said in a speech. Braskem said in May that Musa's priorities include advancing the company's international expansion.

    Asked later how the faltering Brazilian economy is impacting Braskem's plastics business, he said that “the Brazilian economy is pretty challenging.” The slumping economy has contributed to political turmoil in Brazil, including impeachment proceedings against both President Dilma Rousseff and Michel Temer, acting president.

    “[Brazil's gross domestic product] last year declined about 4 percent and this year the banks are talking about minus 3.5-3.7 percent,” Musa said. “This of course puts some stress on the plastics industry. Local volume in Brazil declined 7 percent last year. This year we have the expectation of a similar drop. It could be a little less.”

    He added: “The political and economic situations are challenging. Large companies are involved. This creates uncertainty. Hopefully, we will have some clarity in two or three months when all the impeachments have been decided.”

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