Reliance group owners split the assets – Anil Ambani to get RIL and Mukesh Ambani to get Reliance Infocomm
Reliance Industries owners Ambani brothers reached an ‘amicable’ settlement of the ownership dispute of Reliance group under which elder brother Mukesh will retain Reliance Industries Limited (RIL) and its Petrochemical venture IPCL while Anil gets Reliance Infocomm, Reliance Energy, and Reliance Capital.
“Mukesh will have responsibility for Reliance Industries and IPCL while Anil will have responsibility for Reliance Infocomm, Reliance Energy, and Reliance Capital,” Kokilaben said in a statement that followed a marathon night-long family meeting to hammer out the settlement.
At the height of the battle between the brothers, Anil had asked Mukesh to choose between him and Anand Jain, whom he accused of conspiring to divide the family. In the absence of any favorable response, Anil quit the IPCL board as its Vice Chairman and Director.
Comments: Reliance Industries Limited (RIL), India’s largest private sector enterprise, was formed in 1966. RIL has four complexes at Patalganga (Maharashtra), Naroda (Gujarat), Hazira (Gujarat), and Jamnagar (Gujarat). RIL’s sales consist of petroleum products (57%), polyester and intermediates (19%), polymers & intermediates (15%), chemicals (6%), textiles (1%), and oil & gas (2%).
RIL also constructed a grassroots refinery with a crude throughput capacity of 27 million tons per annum (expanded to 33 million tons per annum) at Jamnagar. The company later acquired a 46% equity stake and management control in the State-owned Indian Petrochemicals Corporation Limited. Besides, the company has also diversified into power and telecom through its group companies.
This split is not expected to impact the polyolefins industry in India or Reliance’s petrochemical operations. Reliance Industries operated by Mukesh Ambani still has all of the company’s assets in the petrochemical area, thereby maintaining its competitive advantage related to the integrated value chain. Mukesh Ambani had aggressive growth and capital investment plans for the company’s petrochemical division, which might now be implemented due to this settlement.
Just get ready for two Reliances – one in petrochemicals and one in information technology both equally aggressive and both with a bright future.
Basell to idle 100KT HDPE capacity in Wesseling, Germany
Basell announced its plan to idle another 100 KT of HDPE capacity at Wesseling, Germany. The company plans to strengthen its European HDPE manufacturing assets by focusing on world-scale plants with integrated or cost-advantaged feedstock. In 2004, the company announced its plans to close or mothball 300 KT of HDPE capacity at the same location.
According to Basell, this will complete the HDPE restructuring program and will allow them to focus efforts on Basell’s recently commissioned state-of-the-art 320 KT per year plant at Wesseling based on Hostalen Advanced Cascade Process technology.
Given the restructuring program, Basell has dedicated its 120 KT per year HDPE lines at Frankfurt and Münchmünster to the production of specialty grades.
Comments: In the last few years the producers of polyethylene across the globe have been forced to evaluate their facilities for inefficiencies. Producers of polyethylene in the Middle East have access to cost-advantaged feedstock and can produce polyethylene at half the cost compared to other regions. The majority of the producers are rationalizing capacity and focusing on idling inefficient and small lines.
Basell is undergoing a similar evaluation of its lines and had decided to idle 100 KT of HDPE capacity at Wesseling, Germany. The company will focus on the newer integrated state-of-the-art line that is cost competitive compared to the older line. The majority of the suppliers are using the smaller lines to produce specialty grades that have lower volumes and higher margins.
Basell sells its 50% stake in Polibrasil to Suzano Petroquimica
The Suzano Group, owner of Brazil’s third-largest petrochemical company announced its plans to purchase its partner’s 50 percent stake in Polybrasil Resinas, a polypropylene producer for $240 million.
Suzano, which already owns half of Polybrasil, will buy the stake from Basell NV. At the same time, Basell will acquire full ownership of the Polibrasil PP compounding business that produces resins primarily for the automotive industry.
Polibrasil operates polypropylene plants with a total capacity of 625 KT at three sites in Brazil and has a 25 KT compounding facility.
Comments: Polibrasil is a joint venture that was formed in 1978 between Hercules and Suzano for polypropylene. This joint venture passed through different owners and eventually became a part of Basell. After 27 years Basell has decided to divest its resin business of the JV and retain 100% of the compounding business. Basell’s compounding business has seen significant growth due to the preference for TPOs in the automotive markets.
Basell has a 220 KT polypropylene facility in Argentina. After this divestiture, Basell will have one PP facility and one compounding facility in South America. Basell seems to be actively restructuring and streamlining its operations to improve its margins. For more information on Basell, please refer to the multiclient study on “Polyolefins Competitive Assessment” from Chemical Market Resources, Inc. This study presents an in-depth analysis of top polyolefins producers including Basell.
Braskem and Petroquisa to invest $240 million in polypropylene joint venture in Brazil
South American polyolefins producer, Braskem together with Petrobras Quimica (Petroquisa) announced their plans to invest US$ 240 million in a modern and competitive industrial unit for the production and sale of polypropylene in Paulinia — State of Sao Paulo.
The new industrial unit will have an initial polypropylene production capacity of 300,000 MT/year, with the potential to reach 350,000 tons. Operations are scheduled to begin by the end of 2007. The raw material used in the new unit will be polymer-grade propylene supplied by Petrobras.
The management of the new unit will be shared by both companies, with Braskem being responsible for sales and marketing. Average annual revenues are projected to reach US$ 317 million, and the net present value of the project is estimated at US$ 204 million.
Braskem will have a 60% stake in the new unit’s voting capital, and Petroquisa will hold the remaining 40%. Out of a total of US$ 240 million to be invested in the new industrial unit, 30% will be equity contributions by shareholders and the remaining amount will be funded by long term financing specifically for this project.
Comments: Upon completion of this unit, Braskem will have a total annual capacity of 950 KT for the production of polypropylene. This joint venture between Braskem and Petroquisa will have several advantages including technology know-how through Braskem’s experience in polyolefins and raw material integration through Petrobras.
The Paulinia industrial unit is part of Braskem’s expansion plan, which has been developed since 2004 and is expected to add 1.2 million tons to its production capacity through 2007. The company is also evaluating several other investments including 20% participation in a $1.5-billion petrochemicals complex to be built by Petrobras in Bolivia near the border with Brazil, and petrochemical projects in Venezuela.
Celanese subsidiary, Ticona to construct ultra-high molecular weight PE plant in Asia
Ticona announced its plans to build an ultra-high molecular weight polyethylene (UHMWPE) plant in Asia.
The company plans to invest in a 20 KT per annum plant in Asia-Pacific. Ticona has not yet decided on the location of the plant and said that site selection was at an “advanced stage”, with preliminary engineering work complete.
The plant is expected to be operational by the end of 2007, the company said.
Comments: Ultra High Molecular Weight PE (UHMWPE) has polymer chains 10 to 20 times longer than high-density polyethylene. UHMWPE is a polyethylene homopolymer with Mw ranging from 3 to 6 million made in a slurry process using a Ziegler catalyst. The longer chains give UHMWPE major advantages in toughness, abrasion resistance, and freedom from stress cracking. Since it is a polyethylene it shares the lubricity, chemical resistance, and excellent electrical properties of conventional HDPE. The long chains are also responsible for the difficulty encountered in processing the material on conventional molding and extrusion equipment. When heated above the melting point it becomes clear but does not flow. It is used in gears or snowmobile drivers and impellers for snow blowers, where it provides low-temperature toughness, corrosion resistance, and lubricity. In the mining industry, it is used as a sliding surface in chutes and hoppers because of its excellent.
This expansion will increase Ticona’s global UHMWPE capacity up to 90,000 metric tons per annum. The company currently produces UHMWPE in North America and Europe and markets it under the trade name GUR®.
ExxonMobil introduces two new Vistamaxx® grades for spunbond nonwoven fabrics
ExxonMobil Chemical announced at Chinaplas 2005 the addition of two new grades to its family of Vistamaxx® specialty elastomers, both specifically designed to bring greater elasticity to the spun bond processing of nonwoven fabrics.
According to the company, the new products also expand the company’s portfolio of nonwoven grades, including grades introduced late last year tailored for the specific needs of melt-blown processing. The new Vistamaxx grades, VM-2125 and VM-2120, were introduced at Chinaplas 2005 in Guangzhou, China.
Vistamaxx VM-2125 (80 MFR, 0.865 density) exhibits high elasticity and low permanent set, while Vistamaxx VM-2120 (80 MFR, 0.868 density) offers medium-high elasticity and good recovery. Both grades offer excellent processibility.
For nonwovens converters using spunbond technology, the latest Vistamaxx products offer an innovative way to provide cost-effective elasticity in nonwovens fabrics. They can be spun in most spunbond lines to produce fabrics at typical polypropylene conditions and rates. Web properties can be tailored by the selection of resin spinning condition and downstream treatment, resulting in fabrics over a wide range of elasticity that are soft, drapeable, and tear-resistant.
Comments: The global demand for polypropylene nonwoven fabrics in 2004 was more than 2,500 KT. Spunbonded applications accounted for almost 60% of global consumption. The personal care & hygiene market is by far the largest market for polypropylene nonwoven fabrics on a global basis accounting for 36% of the global polypropylene nonwoven fabrics demand. Softness, elasticity, strength, and processability are important technical requirements for resins being used in such spun-bonded applications.
Elasticity in nonwovens can be provided by combining existing materials in a composite structure or by mechanical means. One of the advantages of Vistamaxx is that the polymer itself has elastic properties, enabling the resulting nonwoven fabric to be elastic right out of the spun bond processing machine.
Malaysian polyolefins producer Titan Chemicals to invest in polypropylene over the next two years
Malaysia’s Titan Chemicals Corporation Bhd announced its plans to spend at least RM153 million ($40 million) in upgrading critical equipment and facilities over the next two years to increase the capacity of its polypropylene plants by 130,000 tonnes per year.
With China, its largest export market, Titan currently has no plans to expand overseas, although it would be open to growth opportunities in China, Indonesia, Vietnam, Bangladesh, and the Philippines.
Comments: Currently, China is one of the major importers in Asia, and globally, most Asian countries are focusing their efforts on China. This announcement from Titan Chemicals is no different than some of the other producers. Titan is Malaysia’s first and largest integrated producer of polyethylene and polypropylene. The company is a joint venture between TT Chao, which owns 48.8% of the company through his Texas-based Chao group, and state energy company Permodalan Nasional, which owns 45.5%.
Titan Chemicals recently completed floating a stake of about 25% via Initial Public Offering and hence it will be in a position to expand its business over the next two years.
Unocal is in talks with CNOOC after receiving a waiver enabling it to engage in discussions
Unocal Corporation announced that it has received a waiver from Chevron Corporation enabling Unocal to engage in discussions with CNOOC Limited and its representatives concerning a transaction proposed by CNOOC Limited at any time until the date of the Unocal stockholder vote on the proposed merger with Chevron. The date of the Unocal stockholder meeting has not yet been set.
Unocal intends promptly to commence such discussions with CNOOC Limited. There can be no assurance that any agreement with CNOOC Limited will be reached. In connection with entering into the Chevron merger agreement, the Unocal board of directors recommended the transaction to Unocal stockholders.
Unocal Corporation received a proposal from CNOOC Limited, an affiliate of China National Offshore Oil Company, to acquire all outstanding shares of Unocal for $67 per share in cash earlier this week.
On April 4, 2005, Unocal agreed to be acquired by Chevron Corporation in a merger that offers Unocal stockholders an election, subject to proration, between $65 in cash, 1.03 shares of Chevron common stock, and a combination of cash and Chevron common stock for each Unocal share.
Comments: CNOOC (China National Offshore Oil Corporation) is a state-owned company incorporated in 1982. The company is authorized as an exclusive agent for China’s offshore crude oil and natural resources development in cooperation with foreign partners. Headquarters are in Beijing and total employment is 21,000. For this latest deal, they are reaching far off-shore, all the way to California.
Unocal was founded in 1890 with headquarters in El Segundo, California with annual sales of approximately $8B.
The company has proved reserves around the world of approximately 1.75B barrels of crude oil and natural gas equivalents. It produces 159,000 BPD of liquids and 1.5mm cf/d and natural gas. Unocal operates 3 US refineries and almost 2,000 gas stations and is considered the nation’s 9th largest oil company. Natural gas accounts for over 60% of UNOCAL’s output. 70% of UNOCAL’s reserves are in Asia, close to the booming Chinese market according to CNOOC which could be considered a strategic reason for the offer.
The $18.5B CNOOC bid is already raising some political concerns in the US. The deal must be presented to the Committee on Foreign Investment in the US which reviews the economic and security risks posed by foreign acquisitions. Chevron also made an offer for UNOCAL valued at $16.45B that has been approved by the boards of both firms and the US government FTC. Some analysts point out that absent the national security issue, the CNOOC bid is superior enough to outplay the earlier Chevron bid in which case Chevron would be entitled to a $500mm breakup fee and the transaction would go to CNOOC. However, the Chevron bid, although 10.7% lower than CNOOC’s, could be considered superior because it would take a short period to execute by comparison. Either way, analysts expect some counter offers on UNOCAL which would be considered good for shareholders.
This transaction is the biggest so far by China to spend its accumulated $162B trade surplus by purchasing off-shore assets. CNOOC’s bid is $67.00/share of UNOCAL compared to Chevron’s bid of $60.53/share. CNOOC’s first standing offer works out to $10.55/BBL of proven reserves compared to Chevron’s offer of $9.49/BBL. In either case, this is a far cry from the heated oil market where crude is trading at up to $60.00/bbl. Either way, expect to see the likes of much public maneuvering in this transaction by the companies, press, analysts, and government officials – all with different viewpoints to wage before the final transaction is selected and completed.
Mitsui Companies selected as contractors to construct an HDPE plant for Mehr Petrochemical Company
Japan’s Mitsui Engineering & Shipbuilding Co., Ltd. (MES) and Mitsui Chemicals, Inc. (MCI) jointly entered into a contract with Iran’s Mehr Petrochemical Company Ltd., (MHPC) for the construction of high-density polyethylene (HDPE) manufacturing plant.
The HDPE plant with a design capacity of 300,000 MT/year, will be constructed in Assaluyeh in southern Iran, under a technology license from MCI for its proprietary HDPE production process. Construction is scheduled to begin in February 2006, with completion expected in the first quarter of 2008. MHPC is a joint venture of Iran’s National Petrochemical Company (NPC), Thailand’s Cementhai Chemicals Co., Ltd. (CCC), Thailand’s National Petrochemical Public Company (NPCT), and Japan’s ITOCHU Corporation.
Tyco Plastics UK sold to the private investor – Gil Investments
The UK film business of Tyco Plastics has been bought by private investment firm Gil Investments.
The £60 million (EUR90 million) operation employs about 380 people at plants and several facilities located in Potters Bar, Preston, Brighouse, and Leeds. Its main products are co-extruded blown bale wrap, stretch film, and custom packaging.
The first move after the takeover was to rename the company Total Polyfilm (TPL). Gil has experience in the packaging sector – it previously acquired Midlands firm Peerless Plastic Packaging and grew the business before selling it to Superfos.
Comments: Tyco Plastics & Adhesives is a leading maker of polyethylene film, with a processing capability of more than 1 billion lbs/year. The company’s adhesives unit, based in Norwood, MA, makes cloth- and pressure-sensitive tapes and will be sold with the plastics unit.
Tyco Plastics & Adhesives, a division of Tyco International has been in financial trouble since 2002. The company tried to sell its unit in 2002 expecting to raise about $3-4 billion from the sale but was unable to do so. The company had planned to split itself into four separate publicly traded companies: security and electronics; healthcare; fire protection and flow control; and financial services.
Finally, the company has been able to sell its UK-based film business and this should help the company in its financials.
A new process developed for waste plastic to lube oil conversion
Researchers at Chevron and the University of Kentucky have developed a new process for converting waste plastic into lubricating oil for engines.
This is potentially environmentally important from two perspectives. First, a more stable synthetic oil (oil with high paraffinicity and, therefore, a high Viscosity Index (VI, signifying high stability to change in viscosity over a wide temperature range) and low viscosity) will extend the interval between oil drains. That in turn reduces the amount of used oil requiring disposal. According to the EPA, some 200 million gallons each year are dumped into the environment. The other benefit of low-viscosity oil is reduced engine friction and thereby improved fuel economy. Second is the obvious benefit of being able to recycle a portion of the ever-increasing stream of waste plastics. Plastics represent 11 wt% of municipal solid waste today, up from less than 5 wt% in 2001.
The process uses a thermal, noncatalytic, atmospheric pressure pyrolysis process that converts high-molecular-weight molecules in plastic waste to lower-molecular-weight molecules in the lube oil range, which are in turn processed through hydroisomerization to create the lube oils. The Chevron-UKy process can also be used with Fischer-Tropsch wax—a product from the Fischer-Tropsch process that can be further processed into lube oils.
Comments: Even though the type of plastic is not identified, it is probably a polyolefin that resembles high molecular weight paraffin, similar to higher molecular weight Fischer-Tropsch waxes. The process developed by Chevron and the University of Kentucky is most likely a mild cracking (with hydroisomerization) process that yields a lower molecular weight product similar to a synthetic lubricant similar to an alpha olefins class. Instead of starting with ethylene and building up the chain, the new process starts with the polymer or F-T wax and cracks down the chain to a lube oil range material.
If polyolefins are the intended starting point, this could be viewed as a high-value second-end use by “de-polymerizing” the plastic which is already practiced in some aromatic-based polymers like PET. The benefits claimed for the resulting lubricants are similar to the same benefits claimed by many synthetic lubricant formulations now on the market. This process announcement is an interesting first for polyolefin recycling other than regrinding and re-compounding. Now, if someone could only find a wholesale re-use of used tires.
BASF to stop production of dioctyl phthalate and its raw materials in Europe
BASF is to discontinue the production of diethylhexylphthalate (DEHP) and the associated alcohol 2-ethylhexanol (2-EH) in Europe in the third quarter of 2005.
The 2-EH plant in Ludwigshafen, which has an annual capacity of 200,000 metric tons per year, will be shut down and dismantled beginning in October 2005. At the same time, BASF plans to close down several production facilities at its site in Feluy, Belgium, where the company no longer considers it possible to competitively manufacture phthalic anhydride, plasticizers, fumaric acid, and butanediol derivatives. Maleic anhydride will, however, continue to be produced at the site. This move is being planned given the stagnation of European markets, excess capacities around the world, and the unfavorable cost structure of the Feluy site.
Comments: Dioctyl phthalates also known as diethylhexyl phthalates are mainly used as workhorse plasticizers for flexible PVC applications. There is a great deal of environmental pressure in Europe to replace phthalate-based plasticizers including DOP in several applications. As a result, European producers and customers have increasingly been replacing the plasticizer DEHP with alternative products, in particular with C9 and C10 phthalates. This has caused the DEHP market to decrease by 50 percent since 2000. Companies such as BASF have marketed alternative plasticizer products.
For more information on plasticizers and their major applications, please refer to our upcoming multiclient on “Intermaterial Competition of Worldwide flexible PVC & polyolefins and elastomers”
Dow subsidiary Inclosia Solutions signs licensing agreement with South Korean company to develop injection molding parts
Inclosia™ Solutions, a business unit of Dow Chemical Company and developer of innovative enclosure technologies, announced a signed licensing agreement with Korea’s Mosen Co., Ltd., a leading supplier of precision and aesthetic injection molding for telecom application parts such as keypads, covers and film insert molding. Under the terms of the agreement, Inclosia Solutions will license the capabilities and technologies of its EXO™Overmolding System family to Mosen Co., Ltd. The agreement will allow Mosen Co., Ltd. to bring additional advanced decoration technology to its already extensive molding and painting expertise.
The EXO Overmolding System technology is a manufacturing process that enables the incorporation of a wide variety of decorative materials like wood, metal, and designer fabric – leather, metallic, suede, or denim, onto injection-molded plastic enclosures. In the EXO process, a decorative insert is placed inside the cavity of a steel mold and combined with plastic by injection molding. The result is a highly decorative and durable enclosure, which adds the luxurious natural look and feel of a real material done in a mass production environment. Utilizing the versatility of precision injection molding and advanced material lamination, the EXO technology dramatically increases the design flexibility of choosing decoration materials, bridging the gap between fashion and functionality for a wide variety of applications such as mobile phones, handheld electronics, cosmetics, and automotive.
Comments: InclosiaSolutions was established by Dow in 2001 to offer innovative enclosure solutions to help OEMs get their products noticed in the electronics marketplace. Examples of the products include HP iPAQ rugged case, a tablet PC jacket, and Mircosoft wireless mouse with real leather. INCLOSIA™ Solutions was recently awarded as a winner in the “Design News” Best Products of the Year competition. Mosen is the second licensee of Inclosia Solutions’s EXO Overmolding System technology. The first license was granted to Taiwan Green Point Enterprises Co., Ltd., (Green Point Group) on May 9, 2005. It will not be a surprise if we see more licensing activities of EXO technology, in particular, in the Asia Pacific, where converters for electronics OEMs have shifted.
Dr. Frank Zhao of Chemical Market Resources receives “Shanghai City Science & Technology Progress Award”
Dr. Xinyu (Frank) Zhao, Senior research analyst of CMR, has recently won the “Shanghai City Science and Technology Progress Award” from the City Government of Shanghai. The award is for his outstanding research in “Preparation and Application of Naon-particulate Materials” done at the National Engineering Center of Ultrafine Powders (NECUP), Shanghai, China. He did his bachelor’s and master’s in Chemical Engineering at NECUP and worked as a scientist there before he moved to Houston to pursue his Ph.D. in Chemical Engineering at Rice University. Dr. Zhao has published ten peer-reviewed journal articles and made presentations at international conferences in the area of synthesis, characterization, and application of nanomaterials.
His Ph.D. thesis is on the morphology control of emulsions and polymer blends. Before joining Chemical Market Resources, he worked as a product developer at GE Advanced Material in Selkirk, New York. At CMR, Dr. Zhao leads projects with his expertise in nanomaterials, engineering thermoplastics, and polymer blends & alloys. As a native Chinese speaker, he also leads marketing research projects related to Asia.
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