How do you observe the current cycle in the petrochemical markets?

Compared to last year, the petrochemical industry is facing a stronger downcycle. This started in 2019-2020, but it was disrupted by the pandemic, which postponed the addition of planned new capacity and created a special post-lockdown demand, that lasted for 18 months. With new capacity coming onstream and relatively weak consumption patterns, it seems we are at the bottom of that cycle, South America itself being a net importer and therefore a direct recipient of excess supply. While the PP (polypropylene) market is more balanced, in PE (polyethylene), overcapacity is more pronounced and reverts to exports. I expect these fundamentals to rebalance in the medium term, especially as China’s economy bounces and triggers more captive demand. Moreover, South America is projected to register growth in 2023, which should support growth in the petrochemical industry, the sector enjoying a positive relationship with GDP. Braskem is well-positioned within this environment thanks to our product, feedstock and regional diversification, our cost discipline, and our alignment with ESG. Sustainability, in all its forms, is not a passing trend – it is a megatrend. This is where we’ve directed most of our investments.

Braskem set out to significantly increase its bio-based product volumes, as part of the I’m green portfolio. Can you walk us through the different ways in which you are pursuing this goal?

Over the last year, we debottlenecked our green ethylene production facility in Brazil by 30%, essentially increasing our production capacity from 200,000 tons/year to 260,000 t/y. Among the biggest drivers for our expanded production has been the growth in our green EVA (ethylene vinyl acetate copolymer) for the footwear industry. Starting with one brand (Allbirds in the US), Braskem’s green EVA has now been adopted by over 60 brands around the world. To support our growth in the bio-polymer market, we have also recently announced a partnership with Thai company SCG Chemicals to build a green ethylene plant in Thailand. This would be the first of its kind in Asia, combining SCG’s brownfield facilities and converting them to produce bio-PE. Sugar cane-based ethanol feedstock will be supplied from Brazil, with the possibility to eventually develop local value chains with ethanol from the Thai sugar cane industry to improve CO2 footprint even further. In a similar vein, in a partnership with Sojitz, a Japan-oriented global trading company, we launched Sustainea, which will produce and market bioMEG (monoethylene glycol) and bioMPG (monopropylene glycol). MEG is used as a raw material for PET (polyethylene terephthalate), most used in everyday beverage plastic bottles. Besides these different partnerships for technology development and increased production, we also licensed our green ethylene technology with the help of Lummus, a tech licensor, to enable other players to use our proven technology for a better future, for all of us. Also, we announced a project to evaluate an investment in producing carbon negative bio-based polypropylene in the U.S.

Braskem has made various investments in recycling facilities. Can you share the latest? How is your Wenew circular portfolio performing?

Volume-wise, our sales of products with recycled content went up to 54,000 tons in 2022, a 144% increase from 2021. Braskem has become more closely involved in the end-to-end plastics value chain, starting our first fully owned facility for mechanical recycling in Indaiatuba, close to São Paulo; operated by Valoren, this is able to transform 250 million packaging units into 14,000 tons of recycled PE and PP. On top of this, we also acquired 61% of the shares of Wise Plásticos, a leading mechanical recycling company in Brazil, with a goal to achieve 50,000 t/year of recycling capacity by 2026, doubling the capacity of Wise today. Meanwhile, in Europe, Upsyde, JV by Braskem and Terra Circular, is a company that turns hard-to-recycle plastic waste into durable goods like road plates, as well as pallets, used in the construction sector, with a patented technology. Last year, we also launched an innovation hub for developing sustainable packaging, called Cazoolo. By partnering with brand owners, converters, innovation centers and other parties, we can design for sustainability, whereas most packaging today was designed for functionality but not recyclability. A virtual tour at Cazoolo as well as at Valoren recycling plant is available at our Braskem 360 platform (www.braskem360.com).

What role do you think chemical recycling will play in closing the loop on plastics?

Mechanical recycling technologies are not enough to enable full circularity. Of course, it all starts with responsible consumption awareness, sound reuse practices, and then mechanical recycling; but where this is not possible, chemical recycling will take over, overcoming the limitations of mechanical recycling. Even though mechanical recycling remains the low-hanging fruit today, I believe advanced (or chemical/molecular recycling) will be the most relevant in due time. Braskem has an agreement with Valoren, that is planning to build a chemical recycling facility on the same site as our mechanical recycling facility at Indaiatuba. Having both technologies available would enable us to sort between products amenable to mechanical and to chemical recycling, for better efficiency. Initially, they will start with a small, 6,000-ton chemical recycling facility and work on perfecting the technology. The volume will be supplied to Braskem crackers. In this new technology realm, there are many technology routes being developed and that’s why we have different initiatives. Braskem currently runs partnerships both in the US (with CWRU and Nexus Circular) and Brazil (with Senai and the University of Rio de Janeiro), as well as developing in-house innovations at our Centre in Pittsburgh, Pennsylvania.

How will Braskem maintain its leadership in the polyolefins and biopolymers space?

We identify three growth avenues ahead: First, there is scope for selective growth in our traditional petrochemical business, not least by increasing productivity and reducing GHG by 15% by 2030 (net carbon by 2050). Our second growth pillar is to reach 1 MT of green ethylene - and ethylene derivatives - by 2030 while replacing petrochemical feedstocks with bio-based ones. Thirdly, we formalized our aim to sell 1 MT of products with recycled content and avoid 1.5 MT of waste from the environment, by 2030. We invite everyone who wants to know more about Braskem to delve into our Braskem 360º platform, which translates the real world of Braskem into a digital one.