IDB to boost competitiveness of Mexico’s petrochemical sector with US$600 mln loan to Braskem-Idesa

The Inter-American Development Bank (IDB) has approved a US$300 million A Loan complemented by a syndicated B loan of approximately US$300 million to finance Etileno XXI, Mexico’s biggest private petrochemical project, a Braskem-Idesa joint venture. The loan will be granted to Braskem-Idesa S.A.P.I., a joint venture by Brazil’s Braskem SA and Mexico’s Grupo Idesa, to develop, build and operate an integrated petrochemical complex. The complex will be comprised of one ethane cracker and three polymerization plants with a nominal annual capacity of approximately 1,050 kilo tons of polyethylene—a key input for plastic manufacturing. PEMEX Gas y Petroquímica Básica of Mexico will supply ethane that will be used as feedstock for the plant. "The project strengthens the country’s competitiveness through the adoption of state-of-the-art technology that will help limit the industry’s carbon footprint,” said Hans Schulz, General Manager of the IDB’s Structured and Corporate Finance Department (SCF). “The IDB's involvement in this project also contributed to the development of programs that ensure gender balance and local job creation.” “This new petrochemical complex is one of the most efficient in the Americas and will increase production of a key input for the plastics industry at very competitive costs,’’ said Jorge Gallon, the SCF project team leader. The project will allow Mexico to leverage Brazilian know-how and state-of-the-art technology to modernize its production methods and, produce polyethylene, supporting the government’s strategy to boost competitiveness and support industrial development. In fact, Etileno XXI will use Mexico’s abundant ethane stock as the input for production, which is expected to result in 840,000 tons of CO2 emissions avoided—every year—when compared to naphtha-based production. The project is expected to help improve the lives of broad segments of the Mexican population in the state of Veracruz. Located in the Nanchital municipality, the complex is expected to create a peak of 9,800 jobs during construction and 3,000 direct and indirect jobs when the plant begins operations in 2015. Etileno XXI constitutes the largest foreign direct investment by a private Brazilian firm in Mexico. It is the largest project ever undertaken jointly by both countries and serves to foster economic ties between Brazil and Mexico. It is estimated that Etileno XXI will generate approximately US$200 million in tax revenues annually.