Natpet, Schulman launch polypropylene JV
Akron, June 11, 2012
Jeddah-based National Petrochemical Industrial Company (Natpet), a subsidiary of Alujain Corporation, has entered into a joint venture agreement with A Schulman of the US to produce polypropylene compounds.
The 50-50 joint venture, expected to be named Natpet-Schulman Engineering Plastic Compounds, is planning to build a polypropylene compounding plant in Yanbu, where it expects to begin production by the end of calendar-year 2014.
A Schulman's initial equity investment in the relationship is approximately EUR11 million, or approximately $14 million.
Initial project costs, including construction of the facility, infrastructure needs as well as working capital requirements are approximately EUR55 million, or approximately $70 million based on current exchange rates.
Beyond the initial equity investment by the partners, the joint venture intends to take advantage of various low-interest loan options provided by the Saudi Industrial Development Fund and other lending institutions.
The joint venture will manufacture a line of customer-preferred engineered plastic compounds based on A. Schulman's highly regarded technology. Natpet, a well-established petrochemical producer in the region, will provide the joint venture with its regional infrastructure as well as its high-quality polypropylene resin.
The joint venture's new plant will enable A Schulman and Natpet to serve a broad range of customers in the Middle East, Africa and India to capitalize on the growing demand for durable goods and transportation products. All sales outside of these regions will be sold directly through A Schulman.
In addition to the joint agreement, Natpet also agreed to enter into a distribution agreement, where A Schulman will, effective immediately, distribute polypropylene resins for Natpet in Europe to specified customer segments.
'Several aspects of this deal will accelerate A Schulman's expansion and visibility in its priority growth markets of Africa, India and the Middle East while better serving our existing global customers with high-quality polypropylene compounds,' said Bernard Rzepka, general manager and chief operating officer of A Schulman, EMEA.
'At the same time, these actions will allow us to serve global customers more effectively by creating an efficient, cost-effective and state-of-the-art manufacturing facility in the Middle East.'
'By partnering with Natpet, our company has the ability to add significant value to our supply chain as well as broaden Natpet's global exposure. As our Middle East markets continue to grow, we believe a strong presence in the region will be critical to achieving our goal of becoming the number-one niche engineered plastics manufacturer globally,' said Pojhan Vahabi, business director Middle East.
'This joint venture furthers Natpet's vertical integration plan. It is a crucial enabler of creating further downstream projects by providing the key ingredients to manufacture auto and appliance parts in the Kingdom,' said Marwan Nusair, president of Alujain.
Jamal Malaikah, president of Natpet, added: 'The project supports the Saudi government's programme in developing downstream projects and adding value to the intermediary petrochemical production in the kingdom.
'It will create employment opportunities for Saudis and bring new technology. We are proud to have joined hands with a leading player in the engineering plastics compounds business.' – TradeArabia News Service
More Industry, Logistics & Shipping Stories
- Alba receives top UK honour
- Legalising timber products trading in focus
- Experts to discuss aviation issues at Abu Dhabi summit
- Gulf Marine Services makes muted London debut
- Emal to supply molten aluminium to Ducab unit
- Ducab acquires British cable firm
- Emirates SkyCargo wins top awards
- Bayer opens new coatings, adhesives lab in Dubai
- Chep Aerospace unveils new ULD mobile app
- Cargo summit calls for cut in transit times
- Dubai bus fare cheapest among top cities
- DHL Express boosts Mideast fleet
- DNV to re-certifiy Drydocks World services
- Amphibious boats make global debut in Dubai
- Qatar sets up mixed business incubator
- Non-oil sectors ‘biggest contributors to UAE economy’
- Alba educates customers on best practices
- Spinneys to set up distribution centre at Kizad
- Maritime courses draw more trainees
- Dow to showcase at Dubai coatings expo
- UAE aluminium sector backs Syria refugees
- Asry in big vessel repair milestone
- Flare, Jordan form parent company ‘Aereon’
- Drydocks delivers second MCV for US
- ASIS launches amphibious leisure boat
- Taskforce sought to develop Saudi downstream sector
- DP World launches $200m India project
- RAK 'exploring' ceramics unit stake sale
- Mideast carriers top global air freight growth
- DMCA launches maritime solution apps