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Braskem and Petrobras Quimica, two giant Brazilian companies, announced, yesterday, their decision to invest US$ 240 million in a modern industrial unit for the production and sale of polypropylene in Paulínia, state of São Paulo.
Braskem S.A. is a leader in the thermoplastic resins segment in Latin America and one of the three largest Brazilian privately-owned industrial companies. Petroquisa is a subsidiary of state-owned Petrobras.
The initiative, which implies the creation of a joint venture between the companies, was approved June 22, by their respective boards of directors.
The new industrial unit, which will be located in the heart of the main consumer center in Brazil, will have initial polypropylene production capacity of 300,000 tons/year, with potential to reach 350,000 tons.
Operations are scheduled to begin by the end of 2007. Including this additional capacity, Braskem will have 950,000 tons/year production capacity of polypropylene to meet the growing demand for this resin, enabling the Company to consolidate its leadership position in the principal thermoplastics produced by Braskem.
The raw material used in the new unit will be polymer-grade propylene supplied by Petrobas.
"Braskem and Petroquisa are investing in a world-class polypropylene unit, which combines production scale, updated technology and access to competitive raw material," said Braskem's CEO, José Carlos Grubisich.
"Additionally, this initiative consolidates our strategic association with Petroquisa," he added.
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.
"The decision of making this investment shows our confidence in the growth of both the Brazilian economy and the thermoplastic resins market," affirmed Grubisich.
Braskem will contribute the process technology that will be employed in the Paulínia industrial unit, which is the most modern technology available in international markets and as to which Braskem has complete technical know-how, representing a competitive advantage of the venture, in addition to opening the possibility of transferring technology to future projects.
The new unit, according to Braskem officials, will operate under the strictest safety and environmental standards, consistent with sustainable development concepts.
The Paulínia industrial unit is part of Braskem's expansion plan, which has been developed since 2004 and that is expected to add 1.2 million tons to its production capacity through 2007.
Braskem operates 13 manufacturing plants located throughout Brazil, and it has an annual production capacity of 5.8 million tons of resins and other petrochemical products.
Braskem S.A. - www.braskem.com.br
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