"Our challenge lies in becoming more efficient in waste collection, using technology and improving logistics to offer PCR as an environmentally sustainable yet economically viable solution."

Stefan Lepecki

CEO, BRASKEM IDESA

September 02, 2024

What progress did Braskem Idesa make with Terminal Química Puerto México (TQPM)?

In 2023, we secured US$408 million in project finance for Terminal Química Puerto México (TQPM), a subsidiary of Braskem Idesa and a joint venture with Advario. We won the "Oil & Gas Deal of the Year" at the IJGlobal Awards in New York for securing such financing in a globally complex scenario.

By mid-2024, we had made significant progress, completing 70% of TQPM’s construction. We are on track to commence operations in Q1 2025, a pivotal step in solidifying our ethane supply strategy. Importing feedstock from the US will also establish a certain "independence" from the national supply currently provided by Pemex.

Today, we are operating our complex on margins over 80%vof our capacity since we are importing ethane through a "fast track" temporal solution. With the TQPM, we can operate our complex at nearly 100% capacity and consider a potential expansion since we will have the necessary raw materials. This expansion would require lower CapEx because our Etileno XXI complex project had already accounted for this possible future expansion.

Can you describe the TQPM project?

The project is essentially divided into three parts: a pier where ships will bring ethane from Houston to TQPM, storage tanks, and pipelines. We are building two state-of-the-art ships in China for this operation, incorporating the best sustainability concepts, and we already have the concession and permits for the pier.

The second part involves two 50,000 m³ ethane storage tanks. These tanks are special as they operate at cryogenic temperatures below -90 degrees Celsius, requiring special materials and double walls. 

The third part includes the pipelines connecting this port ecosystem with our production plant. We have reached 90% completion of the pipelines and have obtained all required environmental and construction permits. A significant challenge for the latter half of 2024 will be seamlessly integrating this infrastructure with our complex without disrupting operations.

Why is "friend-shoring" becoming crucial for Mexico and Braskem Idesa's competitiveness?

Today, 70% of global polyethylene producers rely on naphtha crackers for feedstock, whereas companies like Braskem Idesa, using ethane, maintain a considerable competitive edge. While Mexican ethane remains our primary choice, Pemex lacks the capacity to meet our requirements and supply its own complexes. Importing ethane from the US will keep us globally competitive despite the logistics cost of importing feedstock, which might initially seem a disadvantage. 

Mexican friend-shoring has long been beneficial. We buy US ethane, produce polyethylene, and sell it to Mexican processors who export final products back to the US. Free trade agreements, favorable logistics, competitive, skilled labor, lower fixed costs, a better plant scale than the average US plant, and the proximity of industries support this win-win supply chain and enhance our competitiveness. 

What sustainability advancements has Braskem Idesa made regarding recycled PCR products and decarbonization?

If global polyethylene prices remain low due to supply and demand imbalances, producing and selling recycled PCR products becomes more difficult. Collecting waste and blending it incur higher costs than producing virgin resin. Our challenge lies in becoming more efficient in waste collection, using technology, and improving logistics to offer PCR as an environmentally sustainable yet economically viable solution. Mexico has great potential for recycling, especially mechanical recycling, due to decades of experience collecting polyethylene and polypropylene. We have partnered with Alcamare for PCR recycling, and in December 2023, we obtained FDA certification for the use of recycled PCR in cosmetics and food applications. This certification opens a significant opportunity for better utilization of PCR.

Decarbonization is a critical focus for us. We are currently in the initial stage of decarbonizing our plants, emphasizing energy efficiency. We are making our processes more efficient by leveraging state-of-the-art and automated technology, including advanced control solutions and machine learning. By 2028, our goal is to reduce emissions by 15%. To date, we have achieved a 7% reduction in emissions.

What is your outlook for 2024 compared to 2023?

2023 was extremely challenging for the global chemical and petrochemical industry, especially for polyethylene, Braskem Idesa's main product. Following the pandemic, significant investments were made in new plants in China and the US, increasing production capacity. Additionally, global inflation and higher interest rates to control it have impacted economies. Looking ahead to 2024, we see improvements in this scenario and are working accordingly.

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