Jun 24, 2020

Braskem Completes Construction of Polypropylene Production Facility in La Porte, Texas

Braskem, the largest polyolefins producer in the Americas and leading producer of biopolymers in the world, today announces the construction completion of its newest, world-class polypropylene production facility located in La Porte, Texas.

Braskem's new facility is the first new polypropylene facility built in North America since 2003 and has global export capacity to serve clients worldwide

Braskem's new facility has a designed production capacity of over 450 kilotons (kt) or 1 billion pounds per year and has the capability to produce the entire polypropylene portfolio including a broad range of polypropylene products including homopolymer, impact copolymer and random copolymers. The construction of the facility positively affected the economy in the Texas Gulf Coast region, which employed approximately 1,300 development and construction workers to build the facility. An additional 50 Braskem permanent full-time jobs were created to support long-term commercial production.

Mark Nikolich, Braskem America CEO, states, "We are proud to announce the milestone of construction completion for our new polypropylene production facility, the newest in the United States. This world scale facility is a confirmation to our clients around the world that Braskem is committed to investing in their future. As commercial production begins later this year, Braskem will position the new facility's domestic production capabilities to replace imported polypropylene volumes, which are currently addressing the shortfall in the United States' domestic market. Commercial production activity at the facility, in conjunction with our new Global Export Hub in Charleston, South Carolina, will also directly support Braskem's global export capability to its clients throughout North America, South America, Europe, and Asia."

The commissioning process is currently ongoing, with Braskem now focused on completing all necessary steps to ensure a safe and successful startup, including the implementation of COVID-19 enhanced facility health and safety guidelines to help protect Braskem team members and contractors alike. During this phase, the company is concluding functional tests and process tests to verify performance of controls and integrated safety systems. Initial production test runs are anticipated to begin in the next month with the first full scale commercial production activity currently expected in the third quarter of 2020.

"The COVID impact on the North American polypropylene industry during April and May affected durable segments such as automotive. However, this impact was partially mitigated with strong sales in nonwovens and packaging applications. In June, demand improved and Braskem's North American polypropylene outlook for the third quarter is positive as clients are ramping up operations and demand has rebounded. Braskem is well-positioned to start up our new world-class polypropylene production line in the current market. The company's global supply chain has made preparations to leverage North America's competitive propylene and polypropylene position for exports supporting our clients in North America, South America, Europe, and Asia. The combination of improved demand, planned outages in the third quarter, and export opportunities will support a smooth ramp up of the new facility," commented Alexandre Elias, Vice President, Polypropylene North America.

Brazil’s Petrobras approves sale of its stake in Braskem petrochemical company

The board of directors of the Brazilian oil company Petrobras approved the sale through a public offering of 100% of the preferred shares it has in Braskem, the largest petrochemical company in Latin America and of which it shares control with Novonor (former Odebrecht).

The sale through a public offering of shares on the Sao Paulo stock exchange will be carried out in conjunction with Novonor, Petrobras, a state-controlled company, but with shares traded on the Sao Paulo stock exchanges, reported this Thursday in a statement to the market. New York and Madrid.

Novonor has 38% of Braskem’s capital but is the direct controller of the petrochemical company as it holds 50.1% of the ordinary papers, which are those with voting rights.

Petrobras has a 36.1% stake in Braskem, including 47% of the voting shares.

The oil company has been negotiating its exit from the petrochemical company for several years because it does not consider its participation in this company strategic and because it is not its controller.

Braskem is the largest producer of thermoplastic resins in Latin America and the leader in the petrochemical sector in the region, as well as the controller, with a 75% stake, of the Mexican petrochemical company Braskem Idesa, whose plant in the state of Veracruz produces about 1, 05 million tons of polyethylene per year.

The approval of the sale puts an end to years of negotiations and disputes with Odebrecht and the arbitration process that Petrobras began in December 2020 and in which it demanded compensation of 800 million reais (about 142.8 million dollars) for the alleged damages caused by his partner.

Braskem’s sale model approved by the board of directors of the oil company is the same that Petrobras used to sell its stake in the fuel distributor BR, which was one of its largest subsidiaries and is the main asset so far included in its ambitious divestment plan.
Petrobras’ shares in the BR were also sold through a secondary public offering of shares on the stock exchange.
Petrobras reported in its statement that it reached an agreement with Novonor to establish guidelines that will allow Braskem’s migration to the New Market, which brings together companies with the best levels of corporate management on the Sao Paulo stock exchange.
As a first step to do so, Petrobras and Novonor will request Braskem’s management to carry out the necessary studies and analysis on the measures it has to adopt to achieve this migration.

Petrobras and Novonor also decided that, after Braskem’s migration to the New Market, “they will carry out the sale of the respective shareholdings that remain (that is, of the common shares) in Braskem.”
The two partners also agreed to sign an annex to the company’s current Shareholders Agreement that will allow the alteration of Braskem’s right of first refusal in new businesses in the petrochemical sector.
The oil company had been trying for years to include the petrochemical company in its millionaire divestment plan, for which it expects to sell assets for between 15,000 and 25,000 million dollars between 2021 and 2026.