Mitsubishi Chemicals to Scrap Petrochemicals in Favor of Rechargeable Batteries

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last May, Mitsubishi Chemical Corporation (TYO:4188) (Tokyo, Japan) and Asahi KASEI Corporation (TYO:3407) (Tokyo, Japan) signed a memorandum of understanding to create a joint venture company to integrate and unify both companies' naphtha crackers in Kurashiki, Okayama prefecture. The original aim of the joint venture was to reduce ethylene production in response to the forecast for the Japanese petrochemicals market and the decreasing domestic demand for ethylene.

The joint venture, to be formalized this spring, is taking steps toward reducing ethylene production. Mitsubishi's Kurashiki ethylene production complex currently has an annual ethylene output of 500,000 tons. However, the joint venture plans to reduce its production capacity by 50% by 2012. Afterward, the joint venture will shut down the ethylene production facility and commence with demolition efforts starting during the second quarter of 2013. The joint venture is planning to invest $3.5 million in the dismantlement and demolition of Mitsubishi's facility.

Mitsubishi has formally announced that it will cease producing naphtha altogether after that time, when their future growth will begin to focus on the development of chemicals for the production lithium-ion batteries. Asahi Kasei will be responsible for ethylene production within the joint venture, however it has recently announced the cancelation of an additional naphtha-cracking unit at its Kurashiki complex. The $1.16 billion plant was scheduled to undergo construction early next year and produce 1 million tons of ethylene per year.

Sources from both companies have stated that Asahi Kasei will more than likely shut its existing naphtha cracker for repairs and use Mitsubishi's in the meantime. When repairs are complete, the joint venture will resume operations of Asahi Kasei's naphtha cracker under the name Ethylene Center, and Mitsubishi's will be scrapped. A new ethylene plant is still on the books for Asahi Kasei as it will be solely responsible for ethylene production within the joint venture.

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