InterviewBrazil’s Braskem will seek alliances in Europe, Asia – CEO

12 March 2010 11:49  [Source: ICIS news]

LONDON (ICIS news)--Brazilian petrochemicals major Braskem intends to pursue its international growth strategy by forming alliances in Europe and Asia, CEO Bernardo Gradin said late on Thursday.

“The priority is the Americas but Braskem is looking for commercial alliances to reach the rest of the world in the future,” he told ICIS news.

Braskem revealed last month that it was purchasing the polypropylene (PP) business of US-based Sunoco Chemicals for $350m (€256m). The announcement came 10 days after Braskem confirmed that it was merging with Brazilian rival Quattor Participacoes, a joint venture between petrochemical holding company UNIPAR and state-owned energy group Petrobras.

The merger with Quattor would strengthen Braskem’s position as a major Latin American player and the Sunoco acquisition gives Braskem a foothold in the US market, said Gradin.

Braskem has said that it intends to expand further into the US market via additional acquisitions.

The next step in Braskem’s plans to become an international company would involve alliances in Europe and Asia, particularly China, said Gradin. “It’s something we will probably explore in the future,” he said.

Such alliances could involve cooperating with companies in markets that would be complemented by Braskem products, Gradin said. However, Braskem was not currently seeking a production platform outside the Americas, he added.

Commenting on acquisition plans in the US, Gradin said the company had no immediate plans because assets are currently over-priced.

“We remain interested in expanding the operations of Braskem in the US but there is no time pressure. We believe that currently the assets are over-priced,” he said. “We think the economic recovery in the US will be slower than most people are predicting.”

Acquisitions would be in Braskem’s core areas of PP, polyethylene (PE) and polyvinyl chloride (PVC), Gradin said. Potential targets may or may not be backward integrated with feedstock production, he added.

Braskem’s growth strategy has been accelerated as a result of the global financial crisis, Gradin said. The merger with Quattor and the Sunoco acquisition, as well as a proposed new investment in Mexico, “would not have happened so soon without the crisis”, he said. “There were many fewer people looking for the same targets.”

Braskem and Mexico’s Idesa revealed last year that they had won an auction held by Mexico’s state-owned Pemex for the supply of ethane feedstock for a proposed ethylene and PE complex in Mexico. The partners benefitted from the crisis because there were very few bidders for the ethane supply, Gradin said.

Braskem is also pursuing new projects in Venezuela, Peru and Bolivia. The rate of development of these projects will depend on project financing and raw material availability, he said.

For the Mexican project, the gas is already available and the financing package is more advanced than for other projects, he said. In contrast, the Peruvian project is still dependent on the exploration of the gas, he added.

In Venezuela, Braskem and state-owned Pequiven have delayed by one year their joint-venture ethylene and PE project. The project, located at Jose in Anzoategui state, is now expected to start up in 2015, said Braskem spokesman Nelson Letaif.

Braskem and Pequiven are also considering relocating their joint-venture PP project from Jose to Paraguana in Venezuela’s Falcon state. The move would simplify the project by eliminating the need to build an integrated propane dehydrogenation (PDH) unit.

Braskem is still evaluating potential locations for the Bolivian project. Likely locations are Puerto Suarez or Tarija, Gradin said. “Braskem has a commitment to be present in Bolivia when there is gas available and the proper financial equation is in place,” he added.

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By: Anna Jagger
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