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| Petronas to exit the vinyls business through plant closures, divestment |
| Petronas Chemicals Group (PCG; Kuala Lumpur) says it plans to exit the vinyls business, closing production plants in Malaysia and divesting a plant in Vietnam. The move reflects PCGs intention to optimize its portfolio, the company says. PCG will close permanently a vinyl chloride monomer (VCM) plant and a polyvinyl chloride (PVC) unit at the companys Kertih Malaysia petrochemical complex and divest a PVC facility at Phu My, Vietnam. The Kertih plants, operated by wholly owned PCG subsidiary Vinyl Chloride Malaysia, have capacity for 400,000 m.t./year of VCM and 150,000 m.t./year of PVC, IHS Chemical says. The Phu My unit, operated by Phu My Plastics and Chemical (PMPC), has capacity for 100,000 m.t./year of PVC, IHS Chemical says. Vinyl Chloride Malaysia will cease operations on 1 January 2013 and its plants will be decommissioned. PCG, meanwhile, will initiate a divestment process for the sale of its 93% stake in PMPC. Vung Tau Shipyard Co. (Vung Tau, Vietnam) owns the remaining 7% in the company. PCG will include a charge of 560 million Malaysian ringgits in its accounts for the fourth quarter of 2012, to cover costs of decommissioning the Kertih plants and remediating the site; provisions for termination of contracts; and impairment expenses. "Todays announcement demonstrates our resolve to high grade our product portfolio," says PCG chairman Wan Zulkiflee Wan Ariffin. "We made this hard call after due consideration of the inherent limitation within our vinyl business and its relative performance against other businesses within the group." The decision "allows us to focus our resources on higher-value products and our growth projects in the pipeline," Wan Zulkiflee says. A key factor behind PCGs decision was the vinyls businesss lack of integration with ethylene dichloride production. "The vinyls business has not been able to capture the full value and synergies of the groups integrated business model. Instead, the groups vinyls business is highly susceptible to the cyclicality of its feedstock market," PCG says. Operating and maintaining the VCM plant also requires "high annual spending," PCG says. Employees of Vinyl Chloride Malaysia will be relocated to other parts of the Petronas group, PCG says.
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