JG Summit sets expansion of petrochem complex

GOKONGWEI-LED JG Summit Holdings Inc. will invest up to $600 million in expanding its petrochemical complex in the next three years, aiming to cater to the industrial needs of the domestic economy and overseas markets.

JG Summit president Lance Gokongwei told reporters after JG Summit’s stockholders meeting late Thursday that after investing about $1 billion in developing a petrochemical platform, the group was ready to raise capacity of its fully integrated manufacturing complex in Batangas City.

From a current capacity of 320,000 tons of ethylene and propylene a year, JG Summit plans to expand capacity to about half a million tons by 2019 at an estimated cost of $500 million to $600 million, Gokongwei said.

Also, the group intends to venture into the production of butadiene as well as aromatics compounds.

“This will require us to expand the cracker, build further downstream (capacity),” Gokongwei said.

Butadiene is an industrial chemical used in the production of synthetic rubber while aromatic compounds (including benzene, toluene and xylene isomers) are widely used by the chemical and energy industries. Currently, the Philippines imports both of these products. This project is expected to be completed by 2019.

“This year is the planning stage but the heavy spending will start by 2017 and 2018 because you have to prepare groundwork and secure all the permits,” he said.

At present, Gokongwei said export receipts accounted for half of the revenue of its petrochemicals group. He said a lot of ethylene and propylene were being exported to North Asia and resin was being shipped to Europe.

JG Summit is also targeting a 95 to 100 percent run rate for the petrochemical plant this year.

Gokongwei said the group had decided to expand the petrochemical operations in Batangas because the existing plant was still very small based on global standards.

The cracker that is being built now has a capacity of between 800,000 and one million tons.
“Since we already made all the initial investments in utilities, port, the docks, the incremental expansion is relatively more cost-efficient,” Gokongwei said.

Boosting JG Summit’s annual petrochemical production capacity to 500,000 tons, Gokongwei said, would be in line with the kind of business that the current infrastructure in the facility could support. “If you go beyond that, investment is very substantial,” he said.

JG Summit Petrochemicals Group (JGSPC) has a 250-hectare fully integrated, world-class, Philippine Economic Zone Authority-accredited manufacturing complex in Barangay Simlong, Batangas City, 120 kilometers south of Manila.