BASF Petronas Chemicals to Close Butanediol, Derivatives Plant in Kuantan
2020-11-20    [Source:PUdaily]

UALA LUMPUR, Nov 18 -- BASF Petronas Chemicals Sdn Bhd (BPC), a joint venture between BASF Nederland BV and Petronas Chemicals Group Bhd (PCG), will close down its butanediol (BDO) and derivatives plant in Kuantan in March next year.

BPC said it is realigning its product portfolio focusing on long-term growth, and this has led to the decision on the closure.

This decision will not impact other plants within the facility, it said in a statement today.

PCG managing director and chief executive officer Datuk Sazali Hamzah said the decision to close the BDO plant will have long-term strategic benefits to BPC and its stakeholders, given the shift in business landscape as well as its unfavourable long-term prospect.

“In line with PCG’s own expansion plans which include developing a specialty chemicals segment, we are looking forward to producing new high value products using advanced technologies.

“This would enable us to access new markets and customers, thus further enhancing our growth for business sustainability,” Sazali said.

Meanwhile, BPC managing director Marko Murtonen said the decision taken is also a result of significant overcapacities in the region due to recent investments in new coal-based BDO production sites.

Marko said BPC is reaching out to all customers to support a smooth transition and will continue to serve customers in the region with other products from BPC.

“In addition, BPC will work closely and provide assistance to our impacted employees in this transition period,” he said.

BASF senior vice-president, Intermediates Asia Pacific, Vasilios Galanos said that as one of the leading companies in the business with BDO and derivatives, the parties are committed to continuous development in the BDO value chain.

“The recent measure is part of our strategy to ensure that we further improve our competitiveness in the markets where we add long-term value to both our customers’ businesses and to BASF, as well as BPC,” he added.

BPC is a joint-venture company between BASF (60 per cent) and PCG (40 per cent) for the propylene and butane derivatives plant in Gebeng, Pahang.

In a filing with Bursa Malaysia today, PCG said BPC will record a one-off charge estimated at US$139 million (RM577 million) in the fourth quarter of 2020.

The amount mainly relates to write-off, impairment, provision for decommissioning, dismantling and personnel severance cost.

At 40 per cent PCG shareholding, the estimated financial implication to PCG is at US$56 million (RM232 million).

BPC’s BDO business started operations in 2004. It manufactures and sells butanediol, tetrahydrofuran and gamma-butyrolactone, which are versatile intermediates used in the chemicals industry.

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