DATE : 2015-05-12
Arkema is in talks with partner Jurong about acquiring more acrylic acid capacity at the Taixing Sunke Chemicals joint venture in China, the company said on Wednesday, after declining an option to increase its stake in the venture earlier in the year.
Arkema decided against an option in early 2016 to invest €200m in the venture to access an additional 160,000 tonnes/year of capacity, but has continued discussions with Jurong about other options for the plant.
Under the new negotiations, which the company says may be concluded imminently, the two companies would agree a 50/50 split of the new capacity rights, the company said.
A deal would see Arkema acquire an additional 80,000 tonnes/year of acrylic acid capacity from the plant for a limited cash-out of around €40m, instead of paying €200m for 160,000 tonnes.
Arkema currently has access to 160,000 tonnes/year of acrylic acid from Taixing, located in China’s Jiangsu province, the capacity of one of the two acrylic acid product lines operational at the site whenArkema invested in the unit in early 2014.
The company had an option to acquire the output produced at a third line, which started up in 2015, but opted against it last January citing market conditions.
“As the financial terms of the option no longer reflect current market conditions for acrylics in China,Arkema has decided not to exercise this option,” the company said at the time.
CEO Thierry Le Henaff remained bearish on the project further into 2016.
“We considered the cost of the second line, [and] even if we could negotiate something a little bit improved… with the conditions of acrylics in China, looking at the economics, [it] was not something we wanted to do,” he said, speaking at a press conference in March.
Source Icis News