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Idemitsu Kosan and Mitsui Chemicals Mulling Chiba Ethylene Complex Consolidation
Idemitsu Kosan and Mitsui Chemicals Mulling Chiba Ethylene Complex Consolidation

Idemitsu Kosan and Mitsui Chemicals Mulling Chiba Ethylene Complex Consolidation

  • 28-Mar-2024 12:30 PM
  • Journalist: Rene Swann

Idemitsu Kosan Co., Ltd. (Tokyo: 5019) and Mitsui Chemicals, Inc. (Tokyo: 4183) have announced their intention to initiate collaborative discussions aimed at enhancing production efficiency through the consolidation of their ethylene complexes in Chiba.

Background:

Back in 2010, Idemitsu and Mitsui formed Chiba Chemicals Manufacturing LLP via a limited liability partnership (LLP), thereby commencing joint operations of their respective ethylene facilities in Chiba. Operating under this framework has enabled the companies to explore synergies that would have been unattainable independently. These synergies include diversification of raw material options, optimization of production processes, development of high value-added fractions, and joint rationalization investments. Despite these collaborative efforts, Japanese ethylene complexes face challenges operating at reduced capacities due to the emergence of new large-scale petrochemical complexes, particularly in China, alongside a decline in domestic ethylene demand. Furthermore, amid global efforts towards carbon neutrality, there is growing pressure to accelerate deliberations on constructing next-generation industrial complexes aimed at reducing CO2 emissions and promoting resource circulation. In light of these factors, Idemitsu and Mitsui have agreed to explore production optimization through the consolidation of their Chiba ethylene complexes, building upon their collaborative history to further enhance the competitiveness of their businesses.

Premise of Deliberations:

Planned Timing of Consolidation: Fiscal Year 2027

Consolidation Method: Closure of Idemitsu's facility with consolidation of production at Mitsui's facility

Post-consolidation business structure: Mitsui's facility will operate jointly through an LLP, joint venture, or comparable arrangement.

Future Plans:

Following a feasibility study, the two companies will engage in discussions regarding the consolidation timeline and subsequently reach a final decision.

Shunichi KITO, President and CEO of Idemitsu Kosan Co., Ltd., remarked, "Idemitsu Kosan is actively pursuing business structure reforms aligned with our vision for 2050, 'Shaping Change.' The consolidation of our ethylene complex stands as a significant project within our medium- to long-term business transformation, aimed at achieving carbon neutrality. Our objectives extend beyond mere production optimization; we are committed to reshaping our business portfolio to prioritize sustainability, emphasizing low-carbon alternatives and resource circulation. Specifically, we plan to explore alternative feedstock options for the consolidated ethylene facility, including bio-naphtha derived from our sustainable aviation fuel (SAF) business and naphtha sourced from chemical recycling of used plastics, expected to commence operations in fiscal 2025. Concurrently, we aim to establish a new green chemicals supply chain, incorporating bio-ethylene from bio-ethanol used in SAF production and synthetic chemicals derived from e-methanol."

Osamu HASHIMOTO, President and CEO of Mitsui Chemicals, Inc., stated, "Mitsui Chemicals' VISION 2030 Long-Term Business Plan underscores our commitment to 'Chemistry for Sustainable World,' positioning us as a global solutions provider driving positive change towards a sustainable future. The consolidation project at our Chiba ethylene complex goes beyond enhancing competitiveness through production optimization. Through regional collaboration and expanded partnerships with industry peers, it serves as a pivotal step towards industrial complex transformation, aligning with our dual objectives of competitiveness enhancement and transition to green chemicals. Our Basic & Green Materials business remains dedicated to cultivating a competitive and sustainable green chemicals sector, focusing on value creation through the adoption of green chemicals and ongoing efforts to enhance capital efficiency."

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