Celanese, SABIC in deal to build $400m plastics plant

03/04/2010 00:00 AST

Dallas-based Celanese Chemical Corp. will build a 50,000 ton polyacetal (POM) production facility in Saudi Arabia through a joint venture agreement with Saudi Basic Industries Corp.(SABIC)

The joint venture with SABIC, with a total invested capital of $400 million, is called National Methanol Co. (Ibn Sina), Celanese said Thursday.

Celanese, which is an affiliate of Duke Energy, holds a 25 percent interest in the venture, while Duke’s interest is also 25 percent. The remaining 50 percent is held by SABIC.

Polyacetal - the substance the facility will be making - is an engineering plastic that is used in mechanical parts for automobiles, such as doors and locks and for various electrical applications.

The investment supports accelerated future growth plans for Celanese’s Advanced Engineered Materials segment, specifically its Ticona Engineering Polymers business, as it delivers innovative solutions for POM customers; and SABIC, in support of its regional business development. Engineering and construction of the facility is expected to begin later this year.

Construction of the facility is part of an extension of the Ibn Sina joint venture, which will now run through 2032. Ibn Sina produces methanol, a key feedstock for POM production, as well as methyl tertiary-butyl ether (MTBE). Through Ibn Sina, Celanese strengthens its raw material and energy positions.

Celanese, SABIC and Duke Energy Corporation entered into the Ibn Sina joint venture in 1981. Celanese and an affiliate of Duke Energy each hold a 25 percent interest in the venture, with the remaining 50 percent held by SABIC. Upon successful startup of the POM facility, Celanese’s economic interest in Ibn Sina will increase from 25 percent to a total of 32.5 percent, providing further financial benefits for Celanese. SABIC’s economic interest will remain unchanged. Over the past three years, Celanese has received approximately $238 million in dividends from the venture.

Moreover, SABIC has developed an advanced technology for the manufacture of polypropylene. The fourth-generation catalyst can be used in packaging, carpets, piping and automotive parts.

The new catalyst has been applied commercially in the SABIC-affiliate Saudi European Petrochemical Company (Ibn Zahr) and demonstrated excellent performance compared to the previously used catalyst, according to the company.

Using the new catalyst, production reached nearly 30,000 tons of polypropylene (as at the end of March 2010).

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