Acquisition of Titan Chemicals Will Boost Capacity of South Korea's Honam Petrochemical Corporation

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last year, Honam Petrochemical Corporation (SEO:011170) (Seoul, South Korea) announced that it would purchase Titan Chemicals Corporation Bhd (Kuala Lumpur, Malaysia) in an all-cash deal amounting to approximately $1.25 billion. The deal, representing Honam's largest foreign acquisition last year, was concluded in December. Titan Chemicals is one of Malaysia's largest aromatics producers and one of the largest producers in Southeast Asia with about 480,000 metric tons per year of polypropylene and 100,000 metric tons per year of butadiene.

Honam is the second-largest ethylene producer in South Korea, and the acquisition of Titan Chemicals will help boost the Seoul-based company into a position to become one of the primary ethylene producers in Asia.

After the acquisition, Honam took over the expansion of the Pasir Gudang aromatics plant in Johor, Malaysia. Currently the plant has an ethylene capacity of 720,000 metric tons per year produced by two naphtha cracking units. Honam plans to boost Pasir Gudang's capacity to 1.2 million metric tons per year by expanding both ethylene units. Unit 1 currently has a capacity 285,000 metric tons per year, while Unit 2 has an annual capacity of 435,000 metric tons. Honam is expecting to expand capacity of both units to 600,000 metric tons per year.

Before the acquisition of Titan Chemicals, Honam had a total ethylene capacity of 1.75 million metric tons year. With the purchase of Titan Chemicals, Honam's annual capacity has risen to nearly 2.5 million metric tons. The expansions of both units 1 and 2, scheduled to take place beginning in 2012, have a total investment value of $500 million.

Honam is currently expanding its polyethylene and polypropylene production lines at its Yeosu facilities in South Korea. The $550 million expansion, scheduled to conclude in early 2012, will boost annual production by 950,000 metric tons.

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