Indorama Ventures Public Company Limited (IVL) announced that it has signed an agreement to purchase the Purified Isopthalic Acid (PIA), Polyethylene Terephthalate (PET) and Purified Terephthalic Acid (PTA) business of Cepsa Química S.A., a subsidiary of Compañía Española de Petróleos S.A.U. in Guadarranque-San Roque, Cadiz, Spain, subject to necessary legal approvals.
Following the acquisition of Cepsa's 600,000 tonnes Canadian PTA assets in June 2015, the new acquisition in Spain has 220,000 tonnes of PIA, 325,000 tonnes of PTA and 175,000 tonnes of PET capacity. The site is one of the few integrated sites worldwide that integrates PTA, PIA and PET where a third party refinery is located at the same site to supply raw materials. It is in line with IVL's successful strategy of vertical integration, portfolio expansion and geographic diversification.
PIA is an important part of the chemistry, half of which is used in the production of PET resin and half in important end uses, especially paints. Cepsa Spain is the only producer of PIA in Europe and is the world's 2nd largest producer. The company owns its own advanced and patented technology, thereby providing a strong barrier to entry. Spain's PTA technology is also proprietary and IVL has been operating its sister plant in Montreal, Canada which it acquired earlier in 2015. Spain's 175,000 tonnes per annum PET plant is technically a sister plant of the IVL-owned Rotterdam plant, which is currently operating at 220,000 tonnes per annum and therefore there exists a established low cost de-bottlenecking opportunity. Surplus PTA after captive consumption on site could economically be sold within Spain to existing PET producers.
"Integrated PIA, PTA and PET in Spain is an attractive and complementary business that fits our existing exposure in Larger Europe. Europe is presently going through a challenging period with fragmented capacities and un-restrained imports from Asia and USA. Spanish assets will complement IVL existing portfolio in Europe with consolidation of PTA and PET assets and with addition of PIA, a high value add business," said Mr. Aloke Lohia, Group CEO of Indorama Ventures. "This acquisition will catapult IVL into a leading position for PIA, which has proprietary technology, offers premium margins and has high barriers to entry. We continually seek low cost, advantageous positions in products adjacent to our core business in the Polyester industry and this acquisition will ensure that we are integrated into our key verticals with a keen eye on our bottom line growth."