Muscat - Established in 2006 to meet the accelerating global demand for polyethylene terephthalate (PET) sheets and resin, Octal has grown to become the sixth biggest producer of PET in the world and the largest at a single site.
Strategically located in Salalah, Octal has also emerged as the biggest PET sheet producer in the world as well as the largest producer of PET resin in the Middle East.
In an interview with Muscat Daily, George Frieji, corporate development manager at Octal, talks about the company's growth, its focused export markets and expansion plans.
How has been Octal's journey since its inception in 2006?
Octal started with the realisation that clear rigid packaging would become the format of choice for a wide range of applications. Over the years, we transformed ourselves from a conventional manufacturing base to one reliant on the most advanced technologies available today.
Octal has made rapid progress since its formation in 2006. Phase II of our expansion plans saw the company's capacity nearly triple from 350,000 tonnes to almost 1mn tonnes. Today, Octal is the largest non-oil exporter in Oman. We contribute close to 1.5 per cent of the sultanate's GDP and generate around US$180mn worth of income for Omani businesses and SMEs as part of a sustainable and locally sourced supply chain. We are investing US$1.5bn to establish Octal as the recognised leader in PET and the industry reference for superior product quality.
In terms of technology and innovation, how is Octal different from competitors?
Octal has radically changed the rigid plastics marketplace deploying innovative processes and high-end technology. Environmental sustainability was engineered into its very core. The conventional manufacturing process for PET sheet involves nine steps from beginning to end and the conventional manufacturing process for PET resin typically depends on up to five reactors for production. Octal's PET production relies on only two reactors, and our DPET sheet process utilises only three manufacturing steps, instead of nine. Producing DPET sheet directly from PET melt resin results in a final product of superior quality and higher consistency with a significantly lower carbon footprint.
Studies completed by third-party experts prove that Octal's DPET sheet has the lowest carbon footprint as compared to other polymers. Moreover, it requires 65 per cent less electricity and 28 per cent less heat to produce than conventional bottle grade PET sheet. Octal PET resin was also shown to consume 63 per cent less electricity and 23 per cent less heat energy than conventional bottle grade PET resin. Our unique process is the product of over US$600mn in investments in high-end proprietary technology. Through the application of the most advanced technologies, Octal is truly a class apart and has set new global environmental benchmarks for both product and environmental excellence.
What are the plans for future expansion?
Octal's most recent expansion saw the construction of a PET plant with two production lines to deliver 2x720 tonnes per day PET bottle grade resin. With this expansion, our PET resin and sheet production capacity stands close to 1mn tonnes annually. We are now focusing our efforts on further expansion to manufacture a total of 2.5mn tonnes per annum of PET and PTA by 2016.
What is Octal's annual turnover? Which are your big markets and which new ones are you looking at?
Octal's 1mn-tonnes-per-annum system will generate more than US$1.2bn of yearly sales. Octal's unique products yield higher volumes and market applications by large multinational brands, including Coca-Cola, PepsiCo, Colgate and Unilever. We now supply 100 per cent of Procter & Gamble's Oral-B dental hygiene products in Europe and are currently qualifying the India and China markets as well.
Backed by increased capacity, Octal will now be able to access 250mn customers in completely new markets like the Middle East and North Africa. We are targeting a 20 per cent increase in our share in these two markets alone by 2014.
Our location of being the closest supplier to Africa gives us an advantage in terms of pricing and transit time. In addition to the Middle East and Africa, we are looking to expand more in the CIS belt, more specifically, Georgia, Ukraine, Armenia, Turkmenistan, Uzbekistan, and Russia. That is a key market for sheet and resin. The strong point of Octal now is its scale and strong logistics platform, a side that matches our technology reach.
Where do you see Octal in the coming few years?
Driven by scale, strategic geographical location and innovation, our mission of leveraging technology to become the global leader in PET packaging is quickly becoming a reality. Octal reached a significant milestone in 2012 when we completed the Phase II expansion of our Salalah Pearl production facility. This added 527,000 tonnes of bottle grade resin to our output, taking our total production to almost 1mn tonnes of PET per year and making our facility the largest in the world on a single site.
We are now looking at expanding the raw materials side, so we are finishing the development of a US$700mn PTA project that will be located on-site, which will provide the raw material to make PET. Expansion plans downstream are also on track with projects in the United States, Europe and the Middle East to supplement our current portfolio.
The US dollar has strengthened significantly against Asian currencies this year. Has there been any impact of this on exports to non-dollar denominated markets?
With our key export markets being the US, Europe, the Middle East and North Africa we do not suffer from exposure to Asian currency fluctuations. As a result, our exports continue to grow in our markets while we target key new expansions to South America, West Africa, and CIS countries.
Do you see more and more food and consumer companies moving from PVC and polystyrene to PET for packaging?
Octal's large-scale capacity and the resulting step change in product performance due to our direct-to-sheet DPET technology, in addition to our leading environmental profile has accelerated the adoption rate of
PET globally. PET is one of the fastest growing polymers in packaging because it combines favourable mechanical, optical, and environmental attributes into a single, easy-to-use product.
Octal has actively worked to convert companies that use environmentally harmful plastics and traditionally manufactured PET to DPET. Recently, we worked with date growers and their technical teams in the Middle East to adapt their packaging to DPET. Emphasising DPET's superior performance, we have also encouraged our customers to substitute it for polypropylene and polystyrene in their poultry trays and yogurt containers. Finally, we are also making efforts to support manufacturers in choosing PET over PVC and are currently in the process of testing these conversions with several of our customers.
Europe is a big market for Octal. How has the eurozone crisis and downturn affected business?
We were shielded from the most negative impacts of the eurozone downturn mainly because we operate in the food-packaging industry, which has been one of the least impacted by the crisis. We enjoy significant competitive advantages in the biggest markets in Europe due to our efficient cost base, state-of-the-art distribution platform and unparalleled transit times. We have not seen our growth in Europe negatively impacted by the crisis and are looking forward to further expanding our customer base in those markets.
© Muscat Daily 2013
