Orica to sell Qenos to ChemChina

31-Oct-05

Orica and its joint venture partner Exxon Mobil Corp. have agreed to sell Qenos, Australia's only maker of polyethylene, to state-owned China National Chemical Corp. (ChemChina) for an undisclosed sum. Qenos is a 50-50 joint venture between Orica and Irving, Texas-based Exxon Mobil, the world's biggest publicly traded oil company. The company has plants at Botany in Sydney and Altona near Melbourne. The Qenos joint venture was formed in 1999 with the aim of selling the business. The formal sale process began in January this year. Deutsche Bank AG advised Orica and Exxon Mobil. The sale is subject to the approval of the Australian Foreign Investment Review Board and Chinese regulators. ChemChina's acquisition comes as demand for petrochemicals is surging in China, which imports 60% of its petrochemicals, mainly from North Asia. The major attraction of the plant is that there is surplus feedstock so it can expand. The plant has the potential for being upgraded, has access to ethane from Longford which can provide a basis for further investment by China National Chemical in both Qenos' plants. Qenos was put up for sale last year by its joint venture owners after the business recovered from a three-year slump, decrepit by low polyethylene prices and poor operations. Though Orica had hoped that sale of the joint venture would attract more than A$310 million ($233 million), the acquisition is estimated to be worth at least A$200 million ($150 million).