Siam Cement plans US$1.5bn investments in petrochem sector

27-Oct-05

In a bid to reduce feedstock costs and stabilise supplies, Siam Cement Plc (SCC), Thailand's largest industrial conglomerate, plans to invest upto US$1.5 billion to build up its assets in the petrochemical sector. This announcement followed SCC's reported 30% decline in net profits in Q3 from last year due to a slowing economy and higher fuel costs. Siam Cement, with nearly 100 subsidiaries and with more than 40 billion baht in free cash flow annually, will finance the investment through internal cash flows. SCC plans to invest US$1.1 billion in a JV with US based Dow Chemical to build a naphtha cracker in Rayong. SCC will hold 67% in the new plant. The plant is expected to have a production capacity of 1.7 million tons of olefins, consisting of 900,000 tons of ethylene and 800,000 tons of propylene. Construction is expected to begin in early 2006 and the plant is scheduled to be operational in 2010. US $400 million is to be invested in the development of a downstream facility with a production capacity of about 700,000 tpa, scheduled to commence operations in 2010. Siam Cement currently has a naphtha cracker with capacity of 1.2 million tpa as well as downstream joint-venture projects with Dow Chemical, Mitsui Chemicals and Mitsubishi Rayon of Japan. The group also has minority stakes in downstream petrochemical projects in Indonesia and Iran.