Swiss Clariant mulls alkoxylates joint venture with SABIC’s subsidiary Kayan

LONDON (ICIS)–Clariant is mulling the creation of a joint venture to produce alkoxylates in Saudi Arabia with SABIC affiliate Saudi Kayan, the Switzerland-headquartered specialty chemicals producer said on Thursday.

Both parties will evaluate the proposition, which would involve using Clariant’s alkoxylates technology in a new unit at Saudi Kayan’s petrochemicals complex in Jubail City, Saudi Arabia.

The joint venture would utilise raw materials provided by Kayan.

A downstream product of ethylene oxide (EO), alkoxylates are used in home and personal care, as well as oil and mining applications, two of Clariant’s divisions.

The move would mesh Clariant further with SABIC, which acquired a 24.99% stake in the business at the beginning of 2018.

SABIC is itself potentially set to be fully acquired by Saudi Arabia’s oil and gas major Saudi Aramco.

SABIC and Clariant announced plans to combine additives and masterbatches operations with the Saudi company’s specialties operations into a new business unit.

SABIC’s CEO said to ICIS in October that more synergies would be announced in due course.

The potential for backwards integration for Clariant’s EO-based value chains, where SABIC could provide cheap raw materials for production, could amount to Swiss francs (Swfr) 50m-80m ($51m-81m) in synergies, according to analysts at Germany’s investment bank Baader Bank.

“Today’s announcement of a JV [joint venture] for an alkoxylates production in Saudi Arabia underpins this view,” the bank said in an investor note.

Clariant’s stock was trading lower on Thursday afternoon to Swfr17.82, down more than 2% compared to the previous close.

Pictured: The Kayan petrochemical complex in Saudi Arabia’s Jubail Industrial City, during construction
Source: Fluor, a contractor at the site

(Swfr1 = $1.01)