Israel's Carmel Boosts Polys Production to 450,000 Tons with $315 Million Project Investment

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The board of Israel Petrochemical Enterprises (Haifa, Israel) has approved a $70 million increase in budget for the new polypropylene plant currently under construction by its subsidiary, Carmel Olefins. The new total investment in the plant of $315 million is one of the largest industrial investments to be made in the country.

The current annual capacity of Carmel Olefins is 200,000 tpa of ethylene, 165,000 tpa of low-density polyethylene, and 200,000 tons of polypropylene. The company is also active in the field of specialized compounding and supplies specialty compounds to the electronics and water pipe industries. The company develops technology to impart high value-added properties to commodity polyolefins by incorporating functional nano-sized phase (NP) into the compound production process.

The new plant will increase Carmel's polypropylene production from 200,000 tpa to 450,000 tpa. The plant will also produce propylene, the feedstock for polypropylene. A shortage of propylene is anticipated as only three plants worldwide, in the U.S. and Japan, have been built in the past few years.

The increase in investment in the plant has been made against a background of restructuring and increasing costs caused by changes in construction inputs. About $20 million was added to the original investment to compensate for increases in exchange rates and the cost of metals.

With Carmel having signed up to $120 million in financing contracts with foreign banks and with another $150 million of finance at an advanced stage with Israeli banks, financing for the project is near closure. Carmel Olefins is also planning a $144 million bond issue.

When completed, the new plant is expected to boost employment at Carmel from 470 to 1,500 people. The company's products are typical of the Israeli plastics and rubber industry's focus on state-of-the-art materials and high quality, fast batch delivery for clients' specialized needs. Domestic sales in the sector for 2002 were about $1.6 billion per annum and exports about $1.1 billion. Growth in the sector hit 56% in the four years prior to 2002, which was the second highest rate in the world. Raw material consumption grew by 80% during the same period, reaching 800,000 tons, the fourth largest rate globally. About 65% of raw material for the sector is imported.

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