Business News
MITSUBISHI RAYON SIGNS LETTER OF INTENT FOR 50:50 JOINT VENTURE WITH SABIC
Wednesday 12. August 2009 - Mitsubishi Rayon Co., Ltd. (MRC) has signed a letter of intent on August 10 with Saudi Basic Industries Corporation (SABIC) on the establishment of a 50:50 joint venture to produce Methyl methacrylate monomer (MMA) and Polymethyl methacrylate (PMMA) in the Kingdom of Saudi Arabia.
Background to the Agreement
To realize further synergy between its own business operations and those of Lucite International, which it has just acquired, Mitsubishi Rayon has been searching for a promising strategic partner to assist it in cementing its superiority in raw materials procurement and help maximize its cost-competiveness with respect to the new ethylene-based production process (Alpha technology) for the production of MMA. The management of Mitsubishi Rayon judged that SABIC was the front-runner candidate with respect to these criteria, and that a partnership with SABIC would promise great rewards from the viewpoint of long-term business strategy. Accordingly, talks were held with SABIC with a view to realizing a mutually rewarding project.
Details of the Agreement
1. Collaboration in MMA operations in the kingdom of Saudi Arabia
The two sides have agreed to establish a 50:50 joint venture in the kingdom of Saudi Arabia for the purpose of manufacturing MMA using the new ethylene-based production process (Alpha technology) commercialized by Lucite and PMMA using techniques developed by Mitsubishi Rayon. MMA production capacity would be 250,000 tonnes, and PMMA capacity 30,000 tonnes per annum. Operations are targeted to start in 2013.
Under the agreement, SABIC would be responsible for supplying the necessary raw materials to the joint-venture enterprise, including ethylene and ethanol.
2. Further talks on expanded collaboration
Mitsubishi Rayon and SABIC will also explore the possibilities to produce other products.
Outline of SABIC
Headquartered in Riyadh, Kingdom of Saudi Arabia
CEO: Mohammed Al-Mady
Established 1976; listed on the Saudi Stock Exchange (equity stakes: Saudi Arabian Government, 70%; others, 30%)
One of worlds top six comprehensive chemicals companies.
Financial Year
2008
2007
2006
Net assets
39
36
27
Total assets
73
68
44
Net assets per share
13 US$
12 US$
11 US$
Net sales
41
34
23
Operating income
10
11
8
Net income
6
7
5
Net income per share
2.00 US$
2.40 US$
2.16US$
(US$ billion)