Braskem Announces New Petrochemical Project in Mexico

Tuesday, Nov 10, 2009

SAO PAULO, Nov. 9 /PRNewswire/ — Braskem S.A. (“Braskem”), in compliance with CVM Instruction 358/02, announces to shareholders and the market that, in association with IDESA, a traditional Mexican corporate group, it won the auction held by Pemex Gas, a state-owned Mexican company, for the acquisition of ethane, which will be used as feedstock for an integrated petrochemical project to be developed in that country (“Project Ethylene XXI”).

Project Ethylene XXI, which is scheduled to start operations in 2015 and will be located in the Coatzacoalcos Petrochemical Complex in the Mexican state of Veracruz, has the main objective of supplying Mexico’s domestic market, which is currently a polyethylene importer. The Project will be installed and operated through a joint venture to be created, with IDESA’s participation and controlled by Braskem. IDESA, a Mexican company with an active presence in international markets, has three business areas: Petrochemicals, Distribution and Construction Systems. It operates several production and commercial companies through strategic alliances of recognized prestige and that are leaders in their respective markets.

Project Ethylene XXI will comprise (i) the acquisition, at competitive conditions, of ethane from Pemex Gas for a period of 20 years, (ii) the construction of a cracker unit that will use the ethane acquired as feedstock for the production of 1 million tons/year of ethylene, (iii) the construction of three integrated polymerization units for the production of 1 million tons/year of polyethylene.

The investment initially estimated for its implementation is up to US$ 2.5 billion over the course of 5 years, with shareholders planning to adopt a project finance model, with at least 70% financed through debt and the remaining 40% with shareholders’ own capital. Braskem’s board of directors has until December 2010 to come to a final investment decision.

Mexico currently imports over 1 million tons/year of polyethylene. Project Ethylene XXI integrates and complements Braskem’s strategy to become a resins leader in the Americas.

Source: PR Newswire