🏭 An asset-like history

Eastman is selling it's Texas City acetyls plant to Ineos for $490 million.

Good morning! Late last week I saw that Ineos had agreed to buy Eastman’s acetic acid plant in Texas City, Texas for $490 million. There’s a lot of interesting history here…

Some helpful background:
This site was initially built by Monsanto (a big old mostly agrochemical company) in 1942 to produce styrene, but most of it was destroyed in the Texas City Disaster just five years later. From what I can tell, Monsanto then rebuilt that styrene plant and then added an acrylonitrile plant at some point in the next couple of decades. Monsanto eventually sold the site to The Sterling Group (formed by Gordon Cain and some Monsanto executives) in 1986 for $213 million. Mr. Cain actually operated a lot like Ineos: he’d buy distressed assets with leverage, piece them together, and try to operate them well. That’s actually how Occidental Petroleum got their chemical business (they acquired Cain Chemical for $2 billion in 1988).

Okay, so where does Eastman come in?
At some point, probably shortly after the Sterling acquisition, an acetic acid plant was built at the Texas City site with BP’s process technology, Cativa, and BP started buying all of that acetic acid. That agreement presumably ended around 2011 when Eastman acquired the site for $100 million with its own plans for the acetic acid. (Eastman also restarted a plasticizer plant at the site, which I’m only mentioning because that plant is not part of the $490 million sale to Ineos.)

Wait, acetic acid?
If you’re unfamiliar, we make acetic acid by reacting methanol with carbon monoxide (both of which are derivatives of natural gas). Most of that acetic acid is used to make vinyl acetate monomer (VAM, mostly used to make polyvinyl acetate and ethylene-vinyl acetate), acetic anhydride, various esters, or used as a solvent in the production of terephthalic acid (PTA, mostly used to make polyethylene terephthalate PET plastic).

Tying it together:
Ineos acquired BP’s aromatics and acetyls business just a couple of years ago, which meant that Eastman was now licensing Ineos’ acetic acid process, and Ineos is trying to grow its acetic acid business. So instead of Ineos building a brand new plant on the US Gulf Coast, they just decided to spend $490 million (mostly cash) to acquire the plant from Eastman. Now those Eastman employees will become Ineos employees, and the asset will live on in Ineos’ hands. And Eastman will continue to make acetic acid, but at its far-more-integrated sites, like its site in Kingsport, Tennessee.

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What else is going on:

  • Texas-based TPC Group finished the first phase of their diisobutylene expansion. The company specializes in C4s and recently filed for bankruptcy about a year ago following an incident at their site in Port Neches, Texas.

  • Solvay is planning to install an electric furnace at its silica-producing site in France. They are saying that this should reduce emissions by about 20%, which makes for an interested comparison to Evonik’s route: use rice hulls as your starting material instead of sand, and get a 30% reduction ($).

  • LanzaTech is planning to sell some of its CO2-based ethanol to Dow Chemical so Dow can make partially CO2-based surfactants. It’s an interesting example of what is possible, but possible does not mean scalable.

  • Lummus is licensing it’s pyrolysis process to a future plastic recycler in South Korea, OMV and Wood are now looking to license their pyrolysis process, and LyondellBasell is saying that their process will have an OpEx of 30-50% lower than the rest of these guys.

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