26 July 2013 08:51 [Source: ICB]
Although domestic markets remain central to SIBUR's strategy, it is keen to expand its global footprint too
SIBUR's synthetic rubbers division may have borne the brunt of difficult conditions these past few years but the business is working to minimise the impact of economic and market cycles. Whereas strengthening domestically is key to the company's overall strategy, managing director Mikhail Gordin is leading the synthetic rubbers division into key foreign markets through new joint ventures.
Deals with leading international players are important for growth
India's chemicals industry continues to boast rapid growth, with GDP projected to grow by 5.7% in 2013, according to the International Monetary Forum's latest World Economic Outlook report.
With the automotive sector particularly strong, SIBUR has formed a joint venture with India's Reliance Industries to tap into the country's thriving rubber industry.
SIBUR first announced plans to develop a 100,000 tonne/year butyl rubber site with Reliance in May 2010. The joint venture, called Reliance Sibur Elastomers Private Limited, will be located at Jamnagar in India's western Gujarat state and is already in the advanced stages of engineering. Construction is tentatively due for completion in 2015. This will be India's first butyl rubber manufacturing facility. Reliance will hold 74.9% in the venture, with SIBUR holding the remaining 25.1%.
"We've implemented the JV in India with Reliance to produce butyl rubber and SIBUR will play a technology partner role. It's a great opportunity for us to license our technology in a fast-growing marketplace where we benefit from feedstock supplied by their refinery," says Gordin. "Reliance is a big company but relatively new to rubber, producing relatively simple grades. Butyl rubber is a highly sophisticated technology."
There are countless hurdles to moving into a new territory but many of these can be overcome through close cooperation with a local partner. Reliance, with its worldscale capacity, infrastructure, and marketing experience, is helping to minimise the complexity of the project, he adds.
China is another notoriously difficult market to break into but forming a partnership with one of the world's major producers is helping to ease the process too.
Last year SIBUR discussed plans to form two possible joint ventures with China's Sinopec for the production of synthetic rubber. The first of these is now well underway and can possibly see the expansion of SIBUR's existing nitrile rubber (NBR) capacity in Krasnoyarsk, Russia, by 14,000 tonnes/year to 56,000 tonnes/year, if there is a decision.
"There are many benefits of using the existing plant and China is already a major customer," says Gordin. "We believe it will be better to have a major Chinese partner to make use of their marketing expertise and use their sales channels. It's a good partnership and could lead to other agreements."
The second joint venture is still in the early discussion stages but if given the go ahead could see another plant established to manufacture nitrile rubber (NBR) and isoprene rubber (IR) in Shanghai, China. If approved following feasibility studies, each plant would have an annual capacity of 50,000 tonnes. The joint venture will use SIBUR's patents and technologies.
"Sinopec is an international leader in synthetic rubber production but we're working with them on products they don't already have in their portfolio," says Gordin. "Our co-operation would be as a technology partner, with a share in the production facility in China and the ability to market product there. However, this is still under discussion."
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