Dow joins German majors with Buna buy

Source: ECN

1995/04/09

DOW CHEMICAL signed the long-awaited agreement on 3 April sealing its acquisition of 80% of the eastern German olefins/polyolefins complex made up of Buna, Sächsische Olefinwerke and Leunawerke.

The resulting new company, which Dow Europe chief Elmar Deutsch predicted could have sales of DM1.5bn ($1.1bn) in two to three years, is to be called BSL Olefinverbund GmbH.

Total investment in the complex up to 2000 will be DM4bn. The Treuhand successor BVS has agreed to foot three-quarters of the bill, as well as assuming losses of the three existing companies and startup losses of the new company.

Dow's concept for BSL is partly based on strategic alliances, joint ventures and other partnerships. The group is negotiating with potential partners to operate new or revamped plants. Plans call for more new plant starts than closures.

Buna's propylene oxide and ethylene oxide plant will be closed by the time the revamped cracker and pipeline are in place. The cracker, for which Linde has the contract, is scheduled to be finished by late 1996, the pipeline by 1998.

Buna's chlorine plant will be upgraded from the mercury to the membrane process. The EDC and VCM plants will be revamped and VCM capacities expanded to 330 000 tonne/year. PVC capacities will be extended to 330 000 tonne/year from 125 000 tonne/year, in cooperation with a partner. Buna's 120 000 tonne/year SBR rubber plant will be retrofitted and operated with a partner. Leuna's 145 000 tonne/ year ldPE plant will be modernised for safety reasons.

Dow is planning new plants at the site, including a 210 000 tonne/year lldPE plant, to be onstream by late 1997. It will also build a 200 000 tonne/year PP plant - its first PP unit - due for startup in Q2 1998. A 130 000 tonne/year aniline plant will start up in late 1996. A 90 000 tonne/year acrylic acid and a 93 000 tonne/year acrylic ester unit are due for completion in 1997-98.

A key element of the polyolefins concept will be a plastics compounding and recycling complex. Talks are in progress with medium-sized plastics processors about investing at the site.

The deal was expected to be approved by Dow Chemical's board within a week of the signing. Approval by EU authorities could take eight to nine months. Dow will assume economic responsibility on 1 June. BVS, the German finance ministry will hold 20% of the complex for up to five years. Dow will then likely exercise its option to acquire the remainder.

Feedstock and energy questions are still to be solved. Plans are to build a pipeline from Rostock to Böhlen, to supply the revamped cracker there.

The new economics minister of Saxony-Anhalt, Klaus Schucht, is negotiating with Russia's Gazprom on behalf of Dow about supplying the complex. It is still unclear whether Gazprom would be interested in a financial engagement in eastern Germany