11 August 2009

Sabic, Mitsubishi create petrochem joint venture

Saudi Basic Industries Corp. (Sabic) inked a joint venture with Japan’s Mitsubishi Rayon Co. to set up a $1 billion joint petrochemical venture.

The plant will have an estimated cost of $1 billion and should start production in 2013, Sabic officials said. The plant will produce 250,000 tons a year of methyl methacrylate monomers, an ingredient in plastics used for acrylic paint, according to the two companies.

Sabic and Mistubishi Rayon will also build a plant to produce 30,000 tons of poly methyl methacrylate a year.

The region’s largest petrochemicals maker, Sabic has already suffered from a drop in petrochemicals demand amid the global economic downturn that pushed its second-quarter net profit 76% down to $483 million (1.81 billion riyal), from $2 billion (7.55 billion riyal) a year earlier.

But the largest Middle East-listed company, backed by the Saudi government, is investing heavily in adding new capacity and building larger plants.

Sabic plans to add 13 million tons of petrochemical production, which will mainly come from a 3.2 million ton joint venture with China’s Sinopec, Yanbu National Petrochemical Co., and Asharq petrochemical plant.

In July, Sabic said it will produce an additional 13 million tons a year of petrochemicals by 2012.

For related information, go to www.isa.org/productivity.