Natpet in JV with Schulman to produce PP compounds

14-Jun-12
National Petrochemical Industrial Company (Natpet), a subsidiary of Alujain Corp has entered into a 50:50 joint venture agreement with A Schulman of the US to produce polypropylene compounds. Likely to be named Natpet-Schulman Engineering Plastic Compounds, the plant is likely to locate in Yanbu and expected to begin production by the end of calendar-year 2014. A Schulman's initial equity investment in the relationship is approximately EUR 11 mln (US$14 mln). Initial project costs, including construction of the facility, infrastructure needs as well as working capital requirements are approximately EUR 55 mln (US$70 mln) based on current exchange rates. Beyond the initial equity investment by the partners, the joint venture intends to take advantage of various low-interest loan options provided by the Saudi Industrial Development Fund and other lending institutions. The joint venture's new plant will enable A Schulman and Natpet to serve a broad range of customers in the Middle East, Africa and India to capitalize on the growing demand for durable goods and transportation products. All sales outside of these regions will be sold directly through A Schulman. In addition to the joint agreement, Natpet also agreed to enter into a distribution agreement, where A Schulman will, effective immediately, distribute polypropylene resins for Natpet in Europe to specified customer segments. “Several aspects of this deal will accelerate A Schulman's expansion and visibility in its priority growth markets of Africa, India and the Middle East while better serving our existing global customers with high-quality polypropylene compounds,” said Bernard Rzepka, general manager and chief operating officer of A Schulman, EMEA. “This joint venture furthers Natpet's vertical integration plan. It is a crucial enabler of creating further downstream projects by providing the key ingredients to manufacture auto and appliance parts in the Kingdom,” said Marwan Nusair, president of Alujain.
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