News Focus: Mexichem moves with PVC expansions in Mexico, potential cracker investment in the US

The Latin American PVC giant is seeking to lock up advantaged feedstocks for its expanding ambitions

Mexichem, already the Latin American leader in the production of polyvinyl chloride (PVC), is seeking to expand further. Not only does it plan an almost 50% increase in PVC production by 2014, it is also targeting upstream feedstocks such as vinyl chloride monomer (VCM) and ethylene to more fully back-integrate its operations.

The company plans to add about 460,000 tonnes/year of polyvinyl chloride (PVC) capacity by 2014, bringing total capacity to 1.5m tonnes/year by 2014, said Rodrigo Garfias, supply chain director, on the sidelines of the 31st annual Latin American Petrochemical Association (APLA) annual meeting in Buenos Aires in early November.

The expansion plans include a possible 200,000 tonne/year greenfield suspension PVC plant in Coatzacoalcos, Mexico. Mexichem also intends to add 200,000 tonnes/year of suspension PVC capacity in Altamira, Mexico, and 60,000 tonnes/year of emulsion PVC in Cartagena, Colombia, he said.

EXPORTING PRODUCTION
The additional output would be exported to regions including Europe, South America and India, as Mexico’s PVC market is balanced, he added.

The Coatzacoalcos project would also involve building a greenfield 600,000 tonne/year vinyl chloride monomer (VCM) plant, said Garfias.

Ethylene and ethylene dichloride (EDC) feedstock could be supplied from the US.

Front-end engineering and design work on the greenfield Coatzacoalcos VCM expansion is underway and is expected to be completed in the first quarter of 2012, he said. A decision will then be made on whether to proceed with the project. If approved, the Coatzacoalcos project could come onstream in 2014.

Mexico’s state oil and gas company Pemex expects to use ethylene from all three of its crackers to supply the planned vinyl chloride monomer (VCM) expansion that is part of its joint venture project with Mexichem, said Carlos Pani, vice president of sales and marketing for its chemical arm Pemex Petroquimica.

“The 200,000 tonnes/year of ethylene from the Pajaritos cracker, which will be part of the joint venture, will supply part of the feedstock. Pemex will supply the rest from our other two crackers in Morelos and Cangrejera.”

JOINT VENTURE WITH PEMEX
Pemex’s planned joint venture with Mexichem (60% Mexichem, 40% Pemex) will include a cracker, a VCM facility and a cogeneration plant – all in Pajaritos, Mexico. The VCM facility produces about 230,000 tonnes/year, and will be expanded to 405,000 tonnes/year by 2015, said Pani.

Mexichem’s contribution to the venture will include salt mining operations and a chlor-alkali facility in the Pajaritos area.

The joint venture is expected to be finalized in February 2012, noted Pani.

Pemex will retain full ownership of its other two crackers in Morelos and Cangrejera, Mexico, which each have 650,000 tonnes/year of capacity.

The crackers are not operating at full capacity, so there is likely to be more spare ethylene to serve the expanded VCM facility, said Pani.

However, the company is studying the expansion of these crackers, he added. Ethylene is used to produce EDC, which is then used to produce VCM. “We have plans to expand our crackers located in Cangrejera and Morelos from 650,000 tonnes/year each to 900,000 tonne/year,” said Pani.

Mexichem is seeking to lock down ethylene feedstock supply for its growing ambitions, and one step could be to take an ownership stake in a new US ethylene cracker.

US CRACKER TALKS
“We are in the very preliminary stages of discussions to partner on a condo cracker in the US,” said Juan Francisco Sanchez Kramer, strategic procurement manager at Mexichem, on the sidelines of the APLA meeting. “We are talking to three potential partners on this.”

Two of the three potential partners have announced firm plans to proceed with crackers in the US based on greater shale gas availability, while the third has announced its intention to build a cracker, noted Sanchez Kramer.

“The cracker would have to be on the Gulf Coast, so it is close to our VCM and PVC plants in Mexico,” he said.

Companies that have announced firm plans to build a cracker in the US include Netherlands-based LyondellBasell, US-based Dow Chemical, and Anglo-Dutch energy firm Shell.

However, Shell announced its intention to build its cracker near the Marcellus shale gas formation in the northeast US.

Many others, including US-based Chevron Phillips Chemical and Brazil’s Braskem have announced they are studying the idea of a new US cracker.

Mexichem is interested in obtaining a share in the cracker that would allow it to take 500,000-600,000 tonnes/year of ethylene to produce EDC, which would be used to make VCM and ultimately PVC.

“We would take the ethylene by pipeline to Mexico,” said Sanchez Kramer.

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