Braskem and Petroquisa in 300,000 tpa PP JV

23-Jun-05

A 300,000 tpa polypropylene (PP) JV- Petroquisa, is being initiated by Braskem, Latin America's leading thermoplastic resin maker, and Petrobas Quimica SA. This unit to be situated in Paulinia, Sao Paulo will be a world-class polypropylene unit, which combines production scale, updated technology and access to competitive raw material. The unit, operations for which are likely to commence by the end of 2007, will require an investment outlay of about US$240 million. Including this additional capacity, Braskem is estimated to have a total polypropylene capacity of 950,000 tpa to meet the growing demand, enabling the company to consolidate its leadership position. Capacity at the plant will have a potential to reach about 350,000 tpa. Braskem will have a voting capital of 60%, with the balance capital with Petroquisa, summing to 40%. Out of the estimated US$ 240 million to be invested, 30% is estimated to be equity contribution and the balance will be funded by long term financing specifically undertaken for this project. Petrobas is liable to supply the feedstock for the plant- propylene, while the management of both the units will be shared by both the companies. The decision of this expansion by Braskem's is considered to be consistent with its strategy of creating value for its shareholders and also a step further to consolidate their strategic association with Petroquisa. The Paulinia industrial unit - now a part of Braskem's expansion plan is expected to add 1.2 million tons to its production capacity through 2007. Braskem currently operates 13 manufacturing plants located throughout Brazil, and it has an annual production capacity of 5.8 million tons of resins and other petrochemical products