18 January 2012 22:39 [Source: ICIS news]
HOUSTON (ICIS)--Methanol producer Methanex may move a second plant from Chile to the US Gulf, a New York stock analyst said on Wednesday.
Methanex said late Tuesday that it would move one of its four methanol plants in the South American country to a site in southern Lousiana, by mid-2014.
But Charles Neivert, managing director at Dahlman Rose & Co. in New York, said he’s been told that the property Methanex purchased in Geismar, about 60 miles south of Baton Rouge, could easily contain two methanol units.
“It looks like there’s at least that possibility,” Neivert said in an interview.
Neivert sent out a research note on Wednesday saying the move to Louisiana would begin to resolve Methanex’s recurrent problems in Chile.
“We expect that there is likely to be another announcement later this year to move a second unit to the US following closely on the heels of the first,” Neivert said in his 18 January note.
The Methanex move marks the second announcement in a year of a new methanol plant operating in the US. In January 2011, it was announced that a mothballed methanol plant in Beaumont, Texas, would be restarted.
Methanex did not immediately return calls on Wednesday. The company’s release said low North American natural gas prices made Lousiana an attractive location for making methanol.
Methanex has three idle plants in Punta Arenas, Chile.
Only one Methanex plant there is operating, with a capacity of 850,000 tonnes/year. The three idle plants have capacities between 800,000-975,000 tonnes/year, according to ICIS.
Neivert said he’s been told that it would cost Methanex $300-$400m (€237-316m) to move one of the Chile units to the US, but that two plants could be moved for $500-$600m.
Paying for the move would not be an immediate concern, Neivert said, because of the two to three years it would take.
“They’ve certainly got the cash flow to pay for this,” Neivert said.
Methanex restarted a plant in Medicine Hat, Alberta, last year for around $45m, and has already recouped that cost.
“The Canadian payback was ridiculously fast,” Neivert said.
Another analyst who covers Methanex, Steve Hansen at Raymond James in Vancouver, said moving a second unit in Chile to the US could make sense “over time”.
But Hansen said it was a low probability, considering Methanex’s recent announcements, which include investing $60m in restarting a plant in New Zealand.
Hansen said there was also the unresolved issue of BP’s 36.9% stake in the Atlas methanol plant in Trinidad, in which Methanex owns the other share.
The Canada-based methanol producer’s chief executive, Bruce Aitken, indicated last year that he wanted to buy BP’s Atlas stake, though neither BP nor Methanex has announced the sale.
Hansen said he suspects Methanex’s purchase of BP’s stake “ranks ahead of a second Chilean move”.
($1 = €0.79)
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