M&G Choose Brazil for World's Largest 450,000-Ton PET Plant

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). After announcing its intention to build a new $70 million PET (polyethylene terephthalate) plant somewhere in South America earlier in 2004, the M&G Group has now revealed its intention to invest $800 million in a 450,000 tons a year plant near the town of Ipojuca in Pernambuco state in the northeast of Brazil. The plant would be the world's largest.

In mid-December 2004, M&G signed a Memorandum of Understanding with state owned Petrobas (Rio de Janeiro, Brazil) to start the evaluation of possible joint investments upstream in the PET chain. M&G confirmed that it is actively studying options to vertically integrate the new plant. The company says that the evaluation of additional investment opportunities requires further research before any firm commitment can be made.

When describing the company's intentions in the market with new production PET capacity earlier ion the year M&G's Polymers Business Unit chief executive Marco Ghisolfi stressed that the new plant would not be aimed at the commodity PET market which he said was over-supplied and ion need of rationalization. The new plant would be designed to satisfy a growing market for economically viable high performance PET. He said the company predicted that these emerging new applications, that are already fast growing, would reach a demand level that justifies the size of pour new investment in the next two to three years.

These higher performance materials could include material for packaging applications such as proprietary products for applications requiring gas barrier properties, or IV material for foamed PET as used in building and construction applications. Foamed PET is already used commercially in Europe for thermoformed trays.

Brazil and other South American countries import a high percentage of PET and other chemicals and petrochemicals compared to other world regions. In 2002, Brazil imported over 40% of its PET requirements when the US imported only 20% of its PET needs. M&G is looking to upstream investment to allow beverage and PET demand to grow to reach per-capita consumption levels closer to that of Europe and the US.

The company estimates that Brazil accounts for about half of the 800,000-plus tpy PET demand in the region. In 2003 it commissioned its 275,000 tpy PET plant in Altamira, Mexico which during 2004 targeted a massive production boost to 438,000 tpy production capacity following a successful first hike to 310,000 tpy. Most of the Altamira output is sold to processors in Central and North America.

In the new Brazilian plant M&G will use technology aimed at producing lower cost product. Traditional, proven technology will be enhanced by two innovations; one in the melt line and one in the solid-state phase (SSP).

Ipojuca is situated about 60 kilometers from the state capital in the metropolitan region of Recife. It is one of the largest industrial centers in Pernambuco state and includes the industrial and port complex of Suape. There is growth in new industries in the area although current economic activity is based on tourism and the associated service industries.

Family owned, M&G (Gruppo Mossi & Ghisolfi)(Tortona, Italy) has a group production capacity for PET packaging applications of 1.3 million tpy with 80% of the group's $1.6 billion sales derived from PET. The group is divided into three business units, PET Polymer, PET packaging and Acetates.

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