Sasol Ltd. is selling its stake in a Texas-based high density polyethylene resin unit to Ineos Chemicals & Polymers USA for $404 million.
Sasol of Johannesburg and Houston-based Ineos had been 50-50 partners in the unit, which operated as Gemini HDPE LLC in La Porte, Texas. The unit has annual production capacity of just over 1 billion pounds of bimodal HDPE, primarily sold into pipe and film applications.
Ineos had operated the unit, which is located at its Battleground Manufacturing Complex. The acquisition is contingent on financing, Ineos officials said in a Nov. 24 news release.
"This world-class asset is positioned to serve the growing global bimodal markets and would allow our business to meet increased demand from our customers," Ineos CEO Michael Nagle said in the release.
Sasol officials said in a Nov. 24 news release that the sale "represents a further step" in achieving Sasol's strategic and financial goals by accelerating its focus on specialty chemicals and reducing net debt. They added that proceeds from the transaction will be used to repay near-term debt obligations.
The deal is the latest step in a busy couple of months for Sasol. On Nov. 15, the firm began production on a low density PE unit in Lake Charles, La. That line has annual production capacity of about 925 million pounds. It's the final line to open in Sasol's $12.8 billion Lake Charles chemical complex.
In early October, Sasol formed Louisiana Integrated Polyethylene, a 50-50 JV with LyondellBasell Industries. Houston-based LyondellBasell paid $2 billion for its stake in the Lake Charles-based JV. The new LDPE unit is part of the JV, which also includes 1 billion pounds of linear LDPE production and 3 billion pounds of ethylene, a plastic feedstock.
Building the Lake Charles site didn't work out as Sasol had planned. Major cost overruns on the project led to financial problems and the ouster of co-CEOs Bongani Nqwababa and Stephen Cornell in late 2019. The company's situation worsened this year because of the COVID-19 pandemic and low oil prices.