Poland's Lotos, ZAT move ahead with plan for Gdansk petchem complex

29 October 2012 16:06  [Source: ICIS news]

LONDON (ICIS)--Poland-based refiner Grupa Lotos and chemical group Zaklady Azoty Tarnow (ZAT) are drawing up plans for a joint-venture petrochemical complex to be built in the Baltic port city of Gdansk, a source at Lotos said on Monday.

Production would initially be focused on caprolactam (capro) and polyamide 6 (or nylon 6) or polyoxymethylene (POM), he added.

Financing could be provided by the government's Inwestycje Polskie (Invest in Poland) investment agency, the source said.

“The investment is still in the nascent stage and, without details on capacity, capex [capital expenditure] and products to be produced, it is difficult to assess the impact,” WOOD & Company investment bank analyst Piotr Drozd said in a note to investors.

“Nonetheless, we find capacity-driven growth in the chemicals segment as a positive addition to ZAT's investment story. On a through-the-cycle basis, ZAT's plastics segment has generated healthy margins and further product development should allow the company to retain its competitiveness in the international markets,” he added.

In early October, Polish treasury minister Mikolaj Budzanowsk urged state-controlled Grupa Lotos to seek strategic investors to help it expand its fledgling petrochemical division.

The group made its first move into petrochemical production in July, when it launched a 120,000 tonne/year mixed xylenes (MX) plant.

The ZAT group, also state-controlled, is a producer of fertilizers, capro, polyamide 6 plasticizers, titanium dioxide (TiO2) and oxo-alcohols.

It is in the process of merging with another group majority-owned by the state - fertilizer, melamine and capro maker Zaklady Azotowe Pulawy (ZAP) - with the combination of the companies, to be named Grupa Azoty, set to create Europe's second largest fertilizer producer.

The plastics segment, comprising polyamide 6, POM and capro, accounted for 23% of ZAT's 2011 revenues and 30% of its earnings before interest, tax, depreciation and amortisation (EBITDA), according to WOOD & Company.

By: Will Conroy
+44 20 8652 3214

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