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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