Notes On Dow’s Brazilian Biopolymers Project
Jul22

Notes On Dow’s Brazilian Biopolymers Project

As you may have heard, Mitsui and Co. has signed on to an integrated joint venture with Dow to make biopolymers in Brazil. Here are a few observations: 1) What Dow is talking about here is the project it has been planning since 2007 to build a 350,000-metric-ton-per-year linear low-density polyethylene plant that is integrated all the way back to the sugarcane field. Dow originally partnered with Brazilian sugar cane processor Crystalsev, but that company pulled out when its parent, Santelisa was purchased by Louis Dreyfus around the end of 2009. However, this remained an active project within Dow, which proceeded for a couple of years on its own. 2) Dow isn’t coming out and saying it is building a 350,000 MTPY LLDPE plant. The exact size depends on engineering, though Luis Cirihal, Dow’s director of renewable alternatives and business development for Latin America (Dow likes long titles), assures me that it would be “world-scale”, which means about 350,000 metric tons. 3) Dow really won’t come out and say it is an LLDPE plant, exactly, either. The company rather euphemistically is referring to it as a “differentiated polymers” or a “performance polymers” plant. This is a new habit for the company. What I think the company means is that the plant uses its solution process, which is a platform for not only LLDPE, but also for plastomers and elastomers and the like. Dow’s terminology is meant to exclude the old Union Carbide gas-phase Unipol process. 4) A little more on this. Dow has indicated in the past that it is seeking to divest polypropylene and high-density polyethylene. Obviously a HDPE plant can swing to LLDPE. So what I think that Dow means is that it intends to keep the solution process and divest the Unipol process assets. This might not be an absolute. In any case, I have heard from a couple of people who would know about such things that Dow has only been actively marketing the polypropylene business anyway. This would make sense because shale is likely making HDPE a profitable business at the moment. 5) Dow is growing 17,000 hectares of sugarcane in Minas Gerais, Brazil. (This marks the first time a company from Michigan has EVER established a plantation in Brazil to find an alternative source of raw materials for a polymer. Maybe it doesn’t.) 6) Back to the Brazilian project. Later this year, the JV will begin construction of a 240-million-liter-per-year ethanol plant that will be finished in Q2 2013. 7) Financial details are sketchy. Mitsui says it invested $200 million in the JV thus far. I take it Dow has invested that much,...

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Notes From A Latin American Meeting
Apr07

Notes From A Latin American Meeting

Back on March 25, I attended the Petrochemical Networking Meeting in Houston, put on by the Latin American focused chemical consulting groups Intellichem and Maxiquim. It attracts many of the Latin American executives that are in the state for the CMAI conference and NPRA. I picked up a few bits of information from the presentations: 1) Otávio Carvalho, managing director of MaxiQuim, gave a talk on the Brazilian economy. He pointed out that since 2004, Brazilian unemployment dropped from about 13% down to about 6%. “In the future, it will be difficult to find people to work in your companies,” he said. In addition, 30 million people exited poverty and entered the middle class over the last five years. Who would have thought a decade ago that Brazil would have made such a transition by now? 2) Javier Constante, commercial director of performance plastics in Latin America for Dow Chemical, spoke at the gathering. For the first couple of slides, I was worried that I would suffer through a run of the mill marketing oriented talk. I was wrong. It turned out that Javier is a very bright thinker on the very nature of technology. “Do we ever ask ourselves what is wrong with the computer that is sitting in front of you or the packaging that you are using? When you ask yourself these kinds of questions, then you can begin innovating.” So True. Remember how normal life seemed in the 80s? 3) Constante also noted in the Q&A session that Dow was going to move forward with its plan to build a polyethylene plant in Brazil using ethylene derived from ethanol. The plant, he said, would have 350,000 metric tons per year of LLDPE capacity based on Dow’s solution process. It would start up in 2014. “In the coming weeks, we’ll have some kind of announcement,” he said. He also noted that Dow is in discussions with a new feedstock partner for the plant. (This project languished because its first partner—Crystalsev—dropped out.) This coming announcement, I would think, will be a new agreement with a new partner. 4) Rui Chammas, executive five president for Braskem’s polymers division, gave an update on Braskem’s project with Pequiven in Venezuela. He said the ethylene/polyethylene project is “on hold”, noting that Braskem is still in discussions with the Venezuelan government on raw materials. He said that the polypropylene project is “more advanced” though there are still talks around location, etc. I think that Rui was just too diplomatic to pronounce the projects dead in front of a room full of people. Venezuela, as a country, is showing very little upside...

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Braskem To Make Propylene From Ethanol
Oct29

Braskem To Make Propylene From Ethanol

Brazil’s Braskem is taking another step in its efforts to derive chemicals from sugar cane. In September, it started up production of a 200,000-metric-ton plant in Brazil to make ethylene for subsequent conversion into  “green“ polyethene. Now the company plans to invest $100 million to make 30,000 metric tons per year of propylene from ethanol by the end of 2013. The company will use the propylene to make polypropylene that will have same properties as conventional hydrocarbon-derived propylene. Late last year, Braskem signed a deal with Novozymes to develop a biotech route to propylene. However, the 30,000-metric-ton plant will not be based on this technology. At a press conference at the K 2010 plastics fair, the company called the plant‘s technology “proprietary“ and would give few details. However, a possible route that company officials have alluded to in the past is to use ethanol derived ethylene to make butylene, and then through metathesis, convert ethylene and butylene into propylene. The cost of the plant is staggering for a what amounts to semi-works scale production of polypropylene. However, Rui Chammas, executive vice president for polymers at Braskem, says that bio-based polymers have a completely different value proposition than regular polymers. “We are not in competition with fossil polymers,“ he says. He is also quick to add that 70% of the output from the polyethylene is already under contract. Manoel Carnauba Cortez, vice president of Braskem’s based chemical unit, says the company also has its its sights set on another ethanol derivative, ethylene glycol. “We may be an ethylene supplier for EO production in the near future,“ he said. There is strong interest in bio-based ethylene glycol. Coca Cola is beginning to use ethylene glycol as a co-monomer in its PET bottles, likely sourced from Asia. Japanese trading firm Toyota Tsusho, which incidentally is a green polyethylene distributor for Braskem, recently formed a Taiwanese joint venture to make ethanol-based ethylene...

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Industrial Gas Companies Face Brazilian Fine Muito Grande
Sep02

Industrial Gas Companies Face Brazilian Fine Muito Grande

The Brazilian antitrust authority, Conselho Administrativo de Defesa Econômica (CADE), is levying fines totaling about $1.7 billion against Air Liquide, Air Products, Linde, Praxair’s Brazilian subsidiary White Martins. It has also implicated seven managers of those companies. CADE says it found evidence, through wire taps and searches, of an elaborate arrangement to divvy up the market by assigning customers to particular industrial gas companies. “CADE understands the actions of those companies that were investigated resulted in grave damage to industry and the public health of Brazilians,” the regulator said in a statement. (Warning: I translated that myself.) White Martins faces the largest fine, $1,273 million. Air Liquide is on the hook for $143 million. Air Products is looking at $130 million. And Linde may be responsible for $137 million. The fines made Praxair mad. “Praxair strongly believes that the allegations of anticompetitive activity against our Brazilian subsidiary are not supported by valid and sufficient evidence,” the company said in a statement. “We further believe that the fine represents a gross and arbitrary disregard of Brazilian law.” The firm promises that it will “prevail on appeal.” To Laurence Alexander, an equity analyst that covers Praxair for Jeffries & Co., the fine isn’t a shocker. “The threat of potential sanctions has been apparent since 2004, when CADE announced an investigation into alleged price fixing on public tenders as part of a broader government initiative to ‘help tame inflation’,” he wrote to clients. Alexander expects appeals to drag out five to ten...

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