Vulcan Forms Joint Venture with Mitsui & Co., Ltd.
A new joint venture between Vulcan Materials Company (Birmingham, AL) and Mitsui & Co., Ltd. (Tokyo) will construct and operate a chloralkali plant and expand the ethylene dichloride (EDC) capacity at Vulcan's current manufacturing site in Geismar, LA. EDC is a precursor to vinyl and polyvinyl chloride (PVC) products.
The new chloralkali plant will add annual capacity of approximately 210,000 tons of chlorine and 230,000 tons of caustic soda per year. The planned expansion will increase the facility's existing EDC capacity to 270,000 tons per year. The joint venture will acquire existing Vulcan EDC production assets and purchase the rights to use existing supporting utilities and facilities at Geismar. Vulcan will continue to own and operate its existing chloralkali plant and other related facilities at the Geismar location.
Vulcan is a 51% owner of the joint venture and Mitsui is a 49% owner. In addition to the contribution of its existing EDC plant, Vulcan expects to invest approximately $90,000,000 in the joint venture, which is expected to begin production in early 2000.
Vulcan will operate the joint venture facility and market all caustic soda produced by the project. Most of the chlorine produced by the joint venture will be delivered by pipeline to customers within the Geismar area who will return anhydrous hydrogen chloride (HCl) to the joint venture. The HCl will be used by the joint venture as feedstock in the expanded EDC facility. The remainder of chlorine produced by the joint venture will either be purchased by Vulcan for internal consumption or marketed by Vulcan for the joint venture. Mitsui will buy all of the EDC output at the Geismar facility.
"After an outstanding first quarter for the Chloralkali Business Unit, it has become apparent during the second quarter that improving caustic soda prices have not yet overcome the cyclical decline in demand for chlorine and some chlorinated derivatives," said Donald M. James, chairman and CEO of Vulcan.
"The current Asian financial crisis certainly plays a role in this decline for the industry. In addition, the company's performance systems business unit has been adversely affected by weaknesses in the pulp and paper and textile sectors, and margins have not yet improved to anticipated levels. While it is difficult to project chloralkali pricing in this environment, we currently expect chemicals' results to approximate last year's results," James said.
Edited by Beth Brindle