Market outlook:Nurturing the seeds of growth

Next week, ICIS and Scottish Enterprise host a Roundtable event to discuss how the country can develop a sustainable export-led chemicals industry

Concerted union and government efforts to prevent the closure of the INEOS Grangemouth petrochemicals facility in Scotland last year drew attention to the scale and importance of the chemicals sector in the country. The industry, with some 200 companies and 14,000 employees, generates around £9.3bn ($14.9bn) in revenue, of which some £4.5bn goes in exports.

A strong talent base in innovation is vital to Scotland’s chemical sector growth Copyright: Scottish Enterprise

The action plan agreed in late October to save the complex involved a £300m investment to improve the competitiveness of operations by enabling the import of US ethane to feed the larger of the site’s two ethylene production units.

Contracts are in place for US ethane supplies, and an ethane tank will be built by 2016. But the site did not escape intact – the smaller naphtha cracker and associated butadiene and benzene units have been closed. Also, in December, Dow Chemical announced it would close its methyl methacrylate butadiene styrene (MBS) unit at Grangemouth, citing the impact of prolonged economic uncertainty on demand levels.

Scotland has been an active supporter of the chemicals sector and has established several bodies to ensure that the industry has a sustainable future. Key priorities are encouraging innovation and industry/academia liaison, growing the industrial base of industrial biotechnology (IB), and ensuring that employers have suitably trained potential recruits.

Two years ago, Chemical Sciences Scotland (CSS), a partnership between industry, academia and government, launched its Platform for Growth, a refreshed strategic plan for the chemical sciences in Scotland. This has three key themes: increased focus on export growth, the creation of a low carbon economy and growth through collaboration between industry and academia. This year, Life Sciences Scotland and CSS launched the National Plan for Industrial Biotechnology – Towards a Greener, Cleaner 2025 – which aims to increase IB turnover in Scotland from £190m to £900m by 2025.

A major plank is the creation of a national facility, the Industrial Biotechnology Innovation Centre (IBioIC), which began operation in January this year and will act as a single portal for industry to connect with IB technology. The government is making an initial £10m investment in IBioIC, which aims to attract a total investment of £45m during the next five years from industrial membership contributions as well as from UK and EU public funding agencies.

These initiatives and others seek to build on Scotland’s depth and strength in the academic field, provided by a half dozen or so leading universities and a growing number of innovation centres like the new IBioIC and the Continuous Manufacturing and Crystallisation (CMAC) centre, part of the Technology and Innovation Centre at the University of Strathclyde. They also seek to build on the country’s oil and gas reserves, with the prospect of access to shale gas and coal-bed methane in the future.

Caroline Strain, head of chemical sciences at Scottish Enterprise, the government’s economic develoment agency, says maintaining global competitiveness is vital. The limited domestic market means that export growth is key. Also, in common with most of Europe, Scotland suffers from high energy costs.

Strain admits that the Grangemouth closure threat was both “dramatic and quite traumatic, but we’re very pleased to be working with INEOS on a positive note. We’re very keen to ensure that what we’ve got can be retained and built on.” She adds that INEOS not only has land available for future investment by third parties, but is taking a lead in realising the opportunities shale gas could offer for high-value sustainable manufacturing in the country.

Next week, ICIS and Scottish Enterprise will be hosting a high-level Roundtable in Glasgow to discuss the issues surrounding building a sustainable and growing chemical industry in Scotland. Topics include shale gas, feedstocks and bulk petrochemicals, and specialty and bio-based chemicals. The country’s innovation capabilities, industrial biotechnology expertise and supply chain infrastructure will also be covered.

The discussion will be moderated by Paul Hodges of International E-Chem and will include insights from INEOS’s Tom Crotty and other leading industry players. The output from the discussion will appear in a special publication by ICIS in October, looking at the Scottish chemical and IB sector in depth.