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Mizushima naphtha crackers to start-up in April 2011
04
Jun '10
Asahi Kasei and Mitsubishi Chemical Holdings today signed a memorandum of understanding to establish a joint-venture company for the integration and unification of their basic petrochemicals operations in Mizushima with the start-up of unified operation of the respective naphtha crackers in April 1, 2011.

This understanding is the result of an extensive study on the unification of the naphtha cracker operations of Asahi Kasei Chemicals Corp. (subsidiary of Asahi Kasei Corp., hereafter collectively “Asahi Kasei”) located in Mizushima and the naphtha cracker operations of Mitsubishi Chemical Corp. (subsidiary of Mitsubishi Chemical Holdings Corp., hereafter collectively “Mitsubishi Chemical”) located in Mizushima. The parties will now advance discussions to finalize the specifics as required for the scheduled integration and unification.

Operational context
The operating climate for the Japanese petrochemical industry is forecasted to become increasingly severe due to declining domestic demand, expansions of large-scale production facilities in the Middle East, and increasing supply capacity in China. With a shared recognition of the difficulty in sustaining operations under the current configuration, Asahi Kasei and Mitsubishi Chemical performed their study based on a determination of the need to unify their naphtha crackers in the Mizushima industrial zone of Kurashiki, Okayama, Japan, and to establish an optimum, efficient configuration for production and management in order to further strengthen competitiveness and secure profitability.

Under the new configuration of a joint-venture company integrating and unifying basic petrochemicals operations in Mizushima in accordance with today's memorandum, in addition to optimizing the basic petrochemicals production configuration with timely response to changes in the business environment, the parties will also make every effort to further strengthen the Mizushima industrial zone including through alliances with oil refineries.

Outline of the joint-venture company

Start-up: April 1, 2011
Investment ratio: Asahi Kasei Chemicals Corp. – 50%, Mitsubishi Chemical Corp. – 50%
Products: Ethylene, propylene, benzene, and by-products such as C4, C5, hydrogen, C9, and heavy fractions
Operations: The following as performed in Mizushima

• Procurement of feedstocks such as naphtha, liquefied petroleum gas, kerosene, and light oil as well as utilities for production of basic petrochemicals
• Production of basic petrochemicals
• Sales of basic petrochemicals and utilities to Asahi Kasei Chemicals Corp. and Mitsubishi Chemical Corp.
• Procurement of basic petrochemicals in shortfall
• Rationalization of basic petrochemicals operations, formulation and implementation of concrete measures to heighten efficiency

Specifics such as the company name, representatives, paid-in capital, and corporate form are yet to be determined.

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