Chexpress - February 7, 2012

North America

Ethanol venture

POET LLC and Royal DSM hope to start production on their $250 million cellulosic ethanol project in the second half of 2013. Initial production is estimated to be 20 million gallons. The investment will be focused on commercializing ethanol production from discarded corn cobs and stalks. Ultimately the joint venture plans to expand the project to POET’s other 26 corn-based ethanol plants, and then license it to other ethanol companies’ plants. The 50/50 joint venture will be based in South Dakota, but the first project will take place at a plant being built next to POET’s existing corn-based ethanol plant in Emmetsburg, Iowa. Because of Royal DSM’s involvement, POET is forgoing an already-approved $105 million federal loan guarantee issued through the Department of Energy. POET’s project differs from many others in that it relies on a pre-existing infrastructure in the United States’ corn belt for ethanol production. The $250 million investment, subject to regulatory approvals, does not include expansion beyond the initial plant.

Plant closure

Caterpillar Inc. will close its locomotive plant in Canada, where workers have been locked out since the start of the year. Caterpillar subsidiary Progress Rail Services said in a statement that the cost of the structure of the Electro-Motive plant was not sustainable and efforts to negotiate a new labor agreement failed. Electro-Motive had demanded pay cuts of up to 50 percent when it locked out 450 employees at the London, Ontario plant the first of the year. Assembly of locomotives will be shifted to other plants in North and South America.

Lawsuit

Waterkeeper Alliance filed a lawsuit against Taylor Energy Co. Waterkeeper blames Taylor Energy for an oil spill 11 miles off the coast of Louisiana, claiming oil has been flowing into the Gulf of Mexico for more than seven years with few details about what’s being done to stop it. The site of the alleged leak is from an offshore platform and 28 oil wells owned by Taylor Energy, which were damaged by a seafloor mudslide triggered by Hurricane Ivan in 2004. The suit accuses the New Orleans-based company of violating the Clean Water Act and Resource Conservation Recovery Act and seeks civil penalties of up to $37,500/day.

Expansion

Nucor Corporation plans to modernize and enhance its bar mill facility in Darlington County, South Carolina. The company will add equipment to the facility to further diversify its bar steel manufacturing capabilities. The new equipment will allow the company to roll a broader range of bar steel products.

Plant closure

L’Oreal will close a hair care products plant in Solon, Ohio by the end of next year. The move will affect 260 workers. L’Oreal is shutting down the facility as it consolidates its North American shampoo and conditioner production. Work will shift to other L’Oreal plants in Florence, Kentucky and Franklin, New Jersey. Some of the Ohio employees may be offered jobs at other locations.

World

Petrochemical plant funding

The Asian Development Bank (ADB) will help a South Korean consortium build the largest petrochemical plant in Uzbekistan that could meet the country’s commercial and industrial needs for gas. The consortium is composed of Honam Petrochemical Corp., Korea Gas Corp. and STX Energy Co. It established a joint venture called Uz-Kor Gas Chemical LLC with Uzbekistan’s state-controlled oil and gas company National Holding Company Uzbekneftegaz. ADB will provide a 13-year loan of up to $125 million and a 13-year guarantee of up to $275 million that will cover certain risks on loans extended by commercial lenders to Uz-Kor Gas Chemical. The total project cost is estimated at $4 billion with additional financing to come from the Export Import Bank of Korea, Korea Trade Insurance Corporation, China Development Bank, and National Bank of Uzbekistan. Money will also come from various European export credit agencies and international commercial lenders. The plant is expected to be operational in early 2016.

Development plan approved

Russia’s Government Commission on the Fuel and Energy Complex has approved the main provisions of a plan for developing the gas chemical and petrochemical industries in Russia until 2030. The plan was developed by the Energy Ministry. Several of the plan’s provisions are in need of revision, taking into account the wishes of the Transportation Ministry, the Finance Ministry and the Education and Science Ministry. The commission also approved a schedule of key state support measures for the gas and petrochemicals industry, and it supported a cluster approach directed both at developing bulk gas and petrochemical production facilities, and at adjacent processing facilities. Between 2010 and 2030, gas and petrochemical material production in Russia will more than double.

Job cuts

Bekaert is shedding 1,250 jobs in China and 600 in its Belgian home base to face market uncertainty and bad economic times. The company is downsizing its operations and 11,000-strong staff in China following low demand for sawing wire, overcapacity and a drop in prices. The drop in employment from 2,700 in its home base is linked to competitive pressure from abroad and a drop in the market for solar panels.

Factory closure

Pakistani authorities have closed a drug factory alleged to have made faulty heart medicine that killed more than 100 patients. Tests from a laboratory in London showed that tablets produced in the facility contained massive doses of anti-malarial medicine that poisoned heart patients. The factory in Karachi made more than nine million IsoTab tablets, some of which were handed out in the area where the deaths occurred.

Job cuts

AstraZeneca PLC will cut another 7,300 jobs as it warned of a tough year ahead due to government spending cuts on healthcare and stiff competition. The company said job cuts and restructuring are expected to save $1.6 billion a year by 2014. The company will begin consultations with affected employees shortly. AstraZeneca will close its facility in Montreal and lay off some staff in Soedertaelje, Sweden.