DAMMAM: Saudi International Petrochemical Co. (Sipchem) and South Korea's Hanwha Chemical Corp. on Sunday signed a joint venture agreement in Riyadh to establish a new high-tech petrochemical company.
To be located in Jubail, the new company's state-of-the-art plants are to be set up on Sipchem's existing site in the industrial city at an expected cost of SR4 billion ($1.1 billion). The plants will begin operations by the end of 2013.
The new company will have 75 percent Sipchem ownership and Hanwha Chemical will own the rest. It will produce mostly polymers. The joint venture will produce 200,000 metric tons of ethylene vinyl acetate every year and 125,000 metric tons of polyvinyl products annually.
The company's products will form the main ingredients for hot melt adhesives, hot glue sticks, shock absorbers in sports shoes, adhesives for porous material, particularly for wood, paper and cloth. The feedstock for the projects will be sourced from Saudi Aramco, SABIC (Saudi Basic Industries Corp.) and other Sipchem affiliates.
Sipchem had earlier announced the signing of a technology licensing agreement with ExxonMobil Chemical Technology Licensing LLC for the ethylene vinyl acetate project.
Speaking at Sunday's signing ceremony, Sipchem Chairman Abdul Aziz A. Al-Zamil said the plan to establish the new project with Hanwha was a step in the right direction.
"It fits well with Sipchem's endeavor to build a petrochemical project on an international scale ... this is part of the company's Phase III development," he said. "Since its inception in 1999, Sipchem has been in hot pursuit of optimum utilization of both natural and national human resources. Our aim is to provide better returns to investors and create more job opportunities for young Saudis," said Al-Zamil.
Two of Sipchem's affiliates currently produce methanol and butanediol and three other affiliates will start producing carbon monoxide, acetic acid and vinyl acetate monomer in the next two months.
Hanwha Chemical, an affiliate of the Hanwha Group, is the 10th largest commercial and petrochemical conglomerate in South Korea, has been actively expanding its presence in the global market.
At the signing ceremony, Hanwha Chemical President and CEO Ki Joon Hong said: "I strongly believe the new plant to be established in Saudi Arabia will be a stepping stone for Hanwha to become one of the leaders in the global chemical industry."
By the end of 2013, Sipchem's total investment will be nearly SR13 billion. Its total production will reach 2.5 million metric tons of various products. Many of these products are being produced for the first time in the Middle East.
© Arab News 2009
