M&G PET Production Boost at Altamira and Plans for New Brazil Plant to Feed South American Demand

---

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Following tests on its PET (Poly Ethylene Teraphtalate) plant in Altamira, Mexico, the family held M&G group (Gruppo Mosi & Ghisolfi, Tortona, Italy) has announced that it will increase the production rate at the plant to 438,000 tons per annum by early in the second quarter of 2004. The tests showed that the residual capacity potential of the plant coupled with the original process design will allow for this increase.

The Altamira plant (PEC 65000340), which was commissioned in mid 2003, is the largest single stream PET plant in the world. The plant's nameplate capacity was 275,000 tons per annum, but after shaking out teething problems during commissioning, the plant has been running at a rate of 850 tons per day or 310,000 tons per year for the past few months.

"I do not expect to see a great impact from this de-bottlenecking capacity growth as all markets - especially that of Mexico - are still projecting double digit growth for the next few years with the possible exception of the USA," said M&G CEO Marco Ghisolfi. "Even though growth in the American market is slowing, its size means that an annual growth of 5% is sufficient to cause a large demand for the extra resin. In addition our plants are part of a global supply network; they can produce global grades and their cost structure takes into account the logistics of global supply. We expect also that several brand-owners will adopt PET in the next few years which will compensate for the maturing and slow down in growth predicted for some markets," he said.

At the same time, as announcing the de-bottlenecking boost at Altamira, M&G announced its willingness to invest in the construction of a PET plant in Brazil as soon as political constraints on investment are eased. The new plant will probably be located at Recife, although a final decision on the site and capacity of the plant has not yet been taken.

Brazil and other South American countries import a high percentage of PET and other chemicals and petrochemicals when compared to other regions. In 2002 Brazil imported over 40% of its PET requirements compared to the USA which imported only 20% of its demand for the product. The lack of price stability has also been a major factor in curbing growth of local demand as import prices have been heavily affected by exchange rate variations.

Ghisolfi said, "The historically high rate for imports into Brazil stems from the reluctance of local owners to invest in both PET resin and preform production capacities. There are various reasons for this reluctance including some of the fiscal policies of previous governments. I believe that the new administration, having identified the negative impact of these policies on the Brazilian trade balance, has initiated actions to eliminate such distortions."

M&G is confident that a decision to invest in a large new PET plant in Brazil will trigger the necessary upstream developments, including refineries, which the company understands are already under discussion with various parties. Such investments will allow beverage and PET demand to grow to per-capita consumption levels closer to those of Europe and the US. To reach these levels would require double-digit growth for many years to come. PET production is used for bottles, packaging sheet, film and textile fibers.

M&G has a global network of plants and offices including a manufacturing facility at Apple Grove in West Virginia and M&G Polymers in Houston, Texas.