How have Braskem’s operations evolved in Asia?

In 2021, we are celebrating 10 years since Braskem first opened the office here in Singapore. We have grown extraordinarily during this time, acquiring assets in the US and Germany, as well as adding a new polyethylene (PE) plant in Mexico. With the added capacity surplus, Brazil was no longer our main export platform and we felt the need to shift more weight to Asia. In 2019, we changed our organizational structure giving more ownership to the Asian business, which now reports to Rotterdam.

Braskem just announced Singapore will serve as a regional logistics hub. Why was this decided?

We have just launched our new strategy to use Singapore as a hub to the region: we do transhipments out of the PSA (port of Singapore), receiving products from Brazil, Mexico, and US to send them out to customers in the region. This new strategy significantly shortens our lead times, especially for polyolefins. To ship products from Brazil to a customer in China, for instance, we used to rely on traders and distributors, but today we can quickly deliver to China or Malaysia in a couple of days, maybe a week out to Japan, from the hub in Singapore, shortening our time-to-market and reducing the need for intermediaries.

How is the industry recovering from the demand shocks of 2020, and what lasting trends do you notice as a result of the pandemic?

Everybody could observe the demand shocks in the first quarter of 2020, but also that recovery in demand came stronger and faster from Asia. Braskem closed the year in good shape, as the shortage of demand for durables (cars, electronics, etc.) was counter-balanced with a peak in demand for medical and hygiene products, as well as for packaging products. On the chemical supply side, we see a higher offer, especially for butadiene, but Braskem is well-positioned to weather momentary imbalances because we have been in the region for 10 years and we have very loyal and consistent customers.

There is a powerful analogy between the pandemic and climate change, both reminding us that local issues cannot be isolated, the consequences being global. I believe there is a tremendous opportunity to drive sustainability efforts in Asia, which accounts for an important portion of carbon emission in the world.

Braskem announced increasing its bio-polymer production at its Rio Grande do Sul plant with an investment of US$61 million. What drives this further investment?

What motivates us is our own commitment to be carbon neutral by 2050. One of the main vectors through which we can realize this ambitious plan is by investing in renewable feedstock. We are adding 60,000 t/y capacity to our current 200,000 t/ plant. Braskem began bio PE production 10 years ago and we are now a global leader. Besides Europe, Japan is a front-runner in driving demand for bio-polymers, thanks to the strong government commitment to replace fossil-based products with renewable ones. By changing one ton of fossil PE with one ton of green PE, one can cut down on 5 tons of GHG. This is a compelling advantage that more countries are opening to. Singapore, South Korea and China are increasingly more concerned with carbon emissions, illustrating a global trend. Braskem is scaling up its bio PE offer to be prepared for this buoyant demand in the next decade.

What can you tell us about the challenges of producing bio-PE?

Renewable feedstocks and recycling fall under the broader concept of circularity or enabling carbon-circular solutions. At the beginning of the chain, the green PE comes from sugar cane, a plant that absorbs carbon, to be converted into ethanol and ultimately used to produce plastics. But not any source of ethanol can contribute to the circular economy. Braskem’s Brazilian sugar cane does not compete for land with other crops because it is grown in typically inauspicious fields. Also, the farming is mechanized so that labor conditions are also very controlled. Then, to close the loop on circularity, the second challenge is to recycle the product. In mechanical recycling, we work on improving the quality of the waste stream to add value to the recycled plastic. Finally, chemical companies strive to develop viable chemical recycling. Even when all three components- renewable resources, mechanical and chemical recycling- are met successfully, green plastics will not 100% replace virgin plastics. Even when the two have the same properties, they come with different value propositions that justify the price difference. Just like EVs and IC cars will coexist in the long-term, so will virgin and green plastics.

Could you highlight some of Braskem’s main priorities moving forward?

Braskem’s main objective is to maintain its leadership position in polyolefins and bio-polymers. With leadership comes responsibility, even though we don’t have production assets in Asia, we still carry a responsibility through our products in these markets. In Singapore, we are fortunate to be in an environment that is conducive to innovation, digitalization, and sustainability.