JG Summit naphtha cracker plant ready by 2014

Gokongwei-led JG Summit Holdings Inc. expects to start commercial operations of its $800-million naphtha cracker plant, the first in the country, in the first quarter of early next year as the group bets on a renaissance of the Philippine manufacturing sector.

Once fully operational, JG’s naphtha cracker operating unit JG Summit Olefins Corp. (JGSOC) and JG Summit Petrochemical Corp. (JGSPC), producer of basic raw materials for an array of plastic products, are expected to generate between $800 million and $1 billion in turnover for the JG Summit group, the conglomerate said in a report to stockholders.

“This is the single biggest manufacturing investment we’ve made in a single site at over $800 million. That’s a very substantial project. It’s really reaffirmation of the potential of the Philippines especially under the current political leadership,” JG Summit president Lance Gokongwei told reporters after the company’s stockholders meeting late Thursday.

“We think there’s gonna be a revival of manufacturing in this country,” Gokongwei said.

The naphtha cracker plant is seen to allow back integration with JG Summit’s existing polyethylene (PE) and polypropylene (PP) facilities which have so far imported ethylene and propylene inputs.

JG Summit said in its report that the local plastics industry would “tremendously benefit from this pioneering project.” The 320,000 metric tons of ethylene and 190,000 MT of propylene that will be produced by the naphtha cracker will be used as feedstock by JGSPC plants. With the planned increase in evalene PE and PP in the local market, prices of these raw materials for plastic products for packaging as well as for consumer, industrial and agriculture are seen to stabilize.

Evalene PE and PP are widely used for packaging films for fresh produce, frozen food and snack foods as well as for carrier and wet market bags. Container bottles and caps for home maintenance, personal care, petcare, pesticides, crates and cases as well as garden products are likewise formed using Evalene. Household items like tables, chairs and drawers alongside consumer goods like microwave food containers, tumblers and drinking cups also use this input.

Gokongwei said two-thirds of the output of this new naphtha plant would be for the domestic market while one-third would be for export. In JG Summit’s annual report, it was noted that China and Vietnam are targeted as the main export destinations.