04/28/2011

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SAUDI ARABIA: SABIC in chemicals venture with Japan's Asahi, Mitsubishi

Saudi Basic Industries Corp said it will launch a joint venture firm with Japan's Asahi Kasei Chemicals and Mitsubishi Corp.

The new company, Saudi Japanese Acrylonitrile Co (Shrouq), will build a plant to produce acrylonitrile (AN) and sodium cyanide (NaCN) at one of the SABIC affiliates' sites in Jubail.

The facility will have capacity of 200,000 tons annually of the former and 40,000 metric tons annually of the latter, SABIC said in a statement on Wednesday.

The new company, with a paid-up capital of SR40 million will help SABIC diversify its petrochemical portfolio to acrylonitrile butadiene styrene (ABS), carbon fiber, acrylic fiber, acrylamide which serve various industries such as automotive, construction, water treatment, oil recovery, gold mining and others, the statement quoted Mohammed Al-Mady, SABIC's Chief Executive as saying.

The three companies will start conducting basic engineering design and will take a final investment decision in 2012.

The CEO added: "A key driver for the project is Saudi Arabia's National Industrial Clusters Development Program aimed at growing and diversifying the Kingdom's manufacturing sector.”

He added: "AN and NaCN are very important chemicals for downstream diversification into Acrylonitrile Butadiene Styrene (ABS), Carbon Fiber, Acrylic Fiber, Acrylamide and others which serve various industries such as automotive, construction, water treatment, oil recovery, personal care, consumer goods, pharmaceuticals, electronics, gold mining and many others.

"In particular NaCN will support the local mining industry in Saudi Arabia,” he said.

The Asahi Kasei Group has identified AN operations as a focus for global expansion through strategic investment of management resources with the aim of gaining the number one position in the global AN market.

Asahi also states in its official statement that solid demand growth for AN is expected to continue worldwide and that Asahi Kasei Chemicals had been considering the construction of a new AN plant to meet rising demand in the Middle East and North Africa.

The Asahi Kasei Group commented that the new capacity, joined with their other production in Japan and Korea, will make them the largest producer of AN in the world at some 1.4 million tons per year upon completion of the new plant in Saudi Arabia.

The three partners moved forward with studies and negotiations based on the desire to address the growing demands in the region and globally with the establishment of a joint AN project in Saudi Arabia with superior cost-competitiveness.

Under Wednesday's agreement, the three partners will now begin formulating the basic engineering design and perform advance work on a detailed business plan.

Leading world-class AN and NaCN technology, a global network and established infrastructure and feedstock resources are the strengths that SABIC and the partners bring to the joint venture.

The partners are targeting the development of a globally competitive project with best-in-class industrial performance.

The project will also focus on carrying out all necessary details for the JV incorporation and project evaluation, implementation and execution activities with final decision on capital expenditure during 2012.(Syed Rashid Ali, Karachi, Pakistan)

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