09/14/2010

BRASKEM S.A.

A new leader in biopolymers production to emerge: Braskem is to take the world stage at K 2010

The largest producer of thermoplastic resins in the Americas, Braskem is to start-up its new 200,000 tons/year green ethylene plant

Having presented its landmark project of building the first plant to produce green ethylene from sugarcane ethanol at K fair 2007, Brazilian petrochemical company Braskem will have its plant running exactly three years later, when the K 2010 takes place in Dusseldorf, Germany. Built in record time, Braskem’s plant will start production of Green Polyethylene from sugarcane based ethanol as of the end of September.
The green ethylene plant is located in Triunfo, in the Brazilian Southern state of Rio Grande do Sul, and was built with an investment worth R$ 500 million (around US$ 278 m). Its nominal production capacity is 200,000 tons/year, that will equal to the same amount of green Polyethylene. Thanks to its new plant, Braskem will become a global leader in biopolymers production.
Ethylene is the raw material for polyethylene - the most used plastic in the world. The green polyethylene has the same properties and provides the same performance as traditional resin, but with the huge advantage of being made from a renewable resource. The final product, as with polymers made from naphtha or natural gas, can be used by a wide variety of industries, ranging from the automobile industry, through the cosmetics, tools, domestic utensils, food packaging industries, up to the toy manufacturing.
"Braskem is determined to consolidate its position at the top, therefore it is already scheduling new investments in the production of green plastic, which draws its strength from Brazil’s highly advanced sugar cane and ethanol industry", says Bernardo Gradin, Braskem CEO.
The technology for producing plastic from ethanol already existed in the 1970s, but was abandoned for not being competitive with the conventional products based on oil. Since then, Braskem has improved the process and, combining it with the advantages of Brazilian sugarcane based ethanol business, it succeeded to make the green polyethylene highly competitive and sought-after product to the extent that the new plant's total capacity has practically been pre-sold.

Important contracts
Notable clients, from both the national and international markets, interested in creating or reinforcing the association of their brands with the promotion of sustainable development have already closed purchasing contracts for the product. Some of the clients who have already secured their access to Braskem's Green Polyethylene include multinationals such as Toyota Tsusho, Tetra Pak, Procter & Gamble, Shiseido and Johnson & Johnson. Added to these are large Brazilian companies, such as Natura, Brinquedos Estrela, Cromex, Acinplas and other international companies like Petropack in Argentina, and Sphere in France, among others.
One of the reasons why Green Polyethylene is so much in demand by so many leading companies is its positive impact on environment. Throughout its manufacturing cycle – from sugarcane plantation, through ethanol and eventually to the resin production, - it captures up to 2.5 tons of CO2 from the atmosphere per each ton produced. This means that the use of Braskem`s green plastic contributes to reducing greenhouse gases emission.
As part of its commitment to sustainability, Braskem launched the "I’m Green” seal aimed at adding value to products made using the polymers it produces from renewable raw materials. The seal is intended to strengthen the image of its clients' products.
In addition to the new plant, Braskem is also looking at other biopolymers, not limited to green PE production, but also Green PP (green polypropylene). Polypropylene is widely used in the automobile industry and no other company in the world manufactures its green version made from renewable raw materials - it is currently made from petroleum. Braskem is already able to produce Green PP in its laboratories and is currently researching more competitive production routes. To achieve its objective, the company has formed technological partnerships with Danish company Novozymes, the global leader in enzyme production, and Unicamp [the University Of Campinas, Brazil].
Polypropylene is a plastic used in a wide range of everyday products, from food containers, drinking straws and water bottles to washing machines, furniture, and car bumpers. It is the second most widely used thermoplastic, with a global consumption for 2008 reaching 44 million metric tons. The market is estimated to be US$ 66 billion, with an annual growth rate of 4%.


Leader in its market
The largest producer of thermoplastic resins in the Americas, Braskem is publically committed with sustainable development. Since its launch in 2002, Braskem has grown a staggering 20% a year in net revenue leveraged by merger and acquisitions and a sharp focus in its R&D program. The company exports US$ 2.5 billion a year, owns 29 industrial plants, creating thousands of jobs, distributed throughout Brazil and the US, producing more than 15 million tons of thermoplastic resins and other petrochemical products, every year. This not only characterises the environmentally friendly aspect of its product but also the accessible aspect of it.
During the first quarter of this year, Braskem acquired two major companies: Quattor, in Brazil, and the PP business (950 tons/annum) from Sunoco Chemicals, in the US, which is now called Braskem America. Thereafter, Braskem became the top producer of resins in the Americas, with a combined capacity of 6.5 million tons/annum of thermoplastics, and the 8th largest producer in the world.
The company is still seeking out new acquisition opportunities in the US, aiming to consolidate its position in the largest consumer market in the world. Furthermore, Braskem is also establishing an industrial base in Mexico, forecast to produce approximately 1 million tons/year of PE, and planned to start operating in 2015. In addition, Braskem has projects currently under development in Venezuela, Peru and Bolivia: countries in the region where competitively priced raw materials are available in abundance.


A point of reference in sustainability
In line with its pledge to operate according to the principles of sustainable development, Braskem has been selecting its suppliers among those committed to “Code of Conduct for Ethanol Suppliers”. The Code is in harmony with the Brazilian laws as well as the good practices recommended by the “Agro-Environmental Protocol of the State of Sao Paulo”, the “UN Global Compact”, and Brazil’s “National Commitment for the Improvement of Labour Conditions in Sugarcane Production”. The National Commitment aims to bring an end to clearing of the ground by fire, and has among its objectives preserving biodiversity, maintaining the best environmental practices as well as respecting human and labour rights.
“You have to mature to be green" is the name of the manifesto in which Braskem last year publicly stated its commitment to the protection of the environment. The company’s greenhouse gas emissions report, completed this year, shows that it has already fulfilled some of the promises stated in the manifesto. Since it began measuring in 2007, Braskem has reduced its greenhouse gas emissions by 13.6%, reaching 7.3 million tons of CO2 in 2009. This achievement was the result of investments in energy efficiency, moving away from some greenhouse gas producing operations and other running improvements.
Every single eco-efficiency indicator, representing emissions and consumption per ton produced by Braskem, also improved significantly between 2002 and 2009. While the company’s production of solid waste and effluent have fallen by 61% and 40% respectively, it also reduced its water consumption by 19 % and energy consumption by 12%.
Comparing Braskem's environmental performance to industry averages demonstrates its commitment to being green: 4 m3 of water consumed per ton of product, which is significantly lower than the global chemicals industry average of 27.8 m3 - the figure provided by the ICCA (International Council of Chemical Associations). Braskem generates 2.7 kg of waste per ton of product, whilst ABIQUIM [the Brazilian Chemicals Industry Association] figures show a Brazilian average of 11.9 kg.


Growth and strong international presence
In the second quarter 2010, following the acquisition of Quattor and polypropylene assets of Sunoco Chemicals in the United States, Braskem confirmed an increase in its pro-forma consolidated EBITDA (earnings before interest, tax, depreciation, and amortization,) exceeding US$ 581 million. This meant a 15% growth when compared to the previous quarter. The EBITDA margin increased by 1.4 percentage point, reaching 15.9% in the quarter. And in the 12-month accumulated sum, the EBTIDA reached US$ 2.1 billion, which represents 12% growth if compared to the amount obtained at the end of the first quarter.
According to Mr Gradin, "the Brazilian economy has shown resistance each quarter, maintaining the demand for resins at high levels. This context contributed to good operating development of Braskem as a whole, especially the recovery of Quattor, reflecting the new management’s actions, always with the purpose of serving the Brazilian market.”
And he added: “In the second quarter, we started benefitting from the integration with Quattor, with opportunities of synergies estimated at around R$ 400 million EBITDA annually and recurrent from 2012 on, confirming the acquisition’s potential for value creation".
In 2009, Braskem attained net revenues of more than US$ 7.8 billion in standalone basis. Its EBITDA totalled US$ 1.3 billion. During this period, the company - not including Quattor and Braskem America - exported US$ 2.1 billion worth of products to more than 60 countries spread throughout the world. Its export proceeds amounted to 27% of its net revenues, firmly placing Braskem amongst the largest exporting companies in Brazil.
Determined to have a strong international presence, Braskem counts on market development and distribution operations in Europe, the US and Argentina.
Including the acquisitions made this year, Braskem now has plants located in the Brazilian states of Alagoas, Bahia, São Paulo, Rio de Janeiro and Rio Grande do Sul, alongside the three in the US, employing over 6,000 people in total. The company maintains a highly specialized team of approximately 200 researchers and technicians at its Centre of Technology and Innovation, and invests up to R$ 80 million, as it did in 2009, in research and development projects on processes, products and applications. Braskem also owns a research centre in Pittsburgh, Pennsylvania, in the US.
With shares negotiated on the São Paulo (Bovespa), New York and Latin-American section of the Madrid (Latibex) stock exchanges, Braskem manages its relationship with the capital market based on transparency and treating all of its shareholders as equal. The company is listed at the top level of Corporate Governance on the Bovespa and is part of the ISE [Corporate Sustainability Index] since the launch of this exceptional portfolio of shares.



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Braskem will be waiting for your visit at K 2010, October 27th - November 3rd!

Hall 6, stand 6D27

For further information, please contact:

Maria Luiza Abbott, cuca@ajasolutions.co.uk, + 44 (0) 772 029 7199, London
Marcio Damasceno, damascenomailto:@ajasolutions.co.uk +49 (0) 179 875 9154, Berlin
Betise Head, betise@ajasolutions.co.uk, +44 (0) 791 955 4443, London