FocusCanada Petromont closure ‘a major loss’

13 February 2008 18:17  [Source: ICIS news]

By Stefan Baumgarten

 

TORONTO (ICIS news)--Petromont’s decision to mothball its olefins and polyolefins operations near Montreal is a “major loss and wake-up call for manufacturing in Canada,” the president of industry group Canadian Chemical Producers Association(CCPA) said on Wednesday.

 

The Petromont partnership between Dow Chemical and Quebec government finance agency Société générale de financement du Québec (SGF) said on Tuesday it would suspend operations on 30 April, affecting 300 jobs, due to the strong Canadian dollar and high feedstock prices.

 

"If Canada wants to keep manufacturing here, we need to rapidly transform the policy environment for investment," said CCPA president Richard Paton.

 

Ottawa-based CCPA has repeatedly been urging governments to take steps to improve the competitiveness of chemical manufacturing in Canada, including measures to prioritise energy and feedstock supplies for the industry.

 

John Cummings, an independent Toronto-based petrochemicals analyst, said the Petromont closure was expected following Dow’s decision in December to write down its investment in Petromont.

 

Petromont’s disadvantages were its small size, isolated geographical location and lack of feedstock integration, he said. 

 

The company’s heavy naphtha and gas oil feedstocks were mainly imported, while its liquefied petroleum gas (LPG) feedstocks came by rail from refineries in the northeastn US and Canada, including those at the Ontario petrochemicals hub at Sarnia, near the US border to Detroit in Michigan.

 

In addition to the rising Canadian dollar and the feedstock costs, Petromont was also affected by Basell’s decision to close its polypropylene (PP) plant in Montreal to which it supplied feedstock via a pipeline, Cummings said.

 

NOVA Chemicals seemed to be the only Canadian chemicals major that was thriving, largely due to its access to lower-cost feedstock in Alberta, he said.

 

He pointed to NOVA’s recent move to expand polyethylene (PE) production even in Ontario, where others - including Lanxess, Basell and Dow – kept shutting down plants and laying off workers.

 

NOVA was feeding the additional PE capacity with raw materials from is expanded flexi-cracker at Corunna, near Sarnia, he added. 

 

With the unfavourable feedstock situation in its east and the strong Canadian dollar, Canada could see even more plant closures and job losses in its chemicals, plastics and other downstream manufacturing sectors, he said.

 

Last week, a union leader said Canada needed a national energy policy that curbed rising energy exports to the US if it was to fight the series of chemical plant closures in Ontario and Quebec where firms are being pressed by high feedstock and energy costs.

By: Stefan Baumgarten
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