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Altona (notes)

See also the history of the development of the complex.

Note: ICI Australia is now Orica. Updating required in the following references to the company.

Joint venture
In May 1998 Orica announced it would merge its polyethylene business with Kemcor assuming a minority interest of 47 per cent (Kemcor is 50:50 owned by Mobil and Exxon) to be managed by Kemcor's MD. It was later changed to 50:50. A delivered to market cost reduction of 20 per cent was projected by Kemcor. The joint venture produces 470 000 tonnes of polyethylenes while the Botany operations will be upgraded increasing capacity by 35 per cent.

In November 1999, Exxon purchased Mobil for US$61 billion. In Australia Mobil owns the PRA refinery near Altona that supplies the gas oil for Kemcor (50:50 owned by Exxon and Mobil). Exxon also owns 50 per cent of the Bass Strait oil and gas fields.

In 2000, the LDPE and SBR production units were closed.

In May 2003, Orica valued its shareholding in Qenos at $0.00

Gas shortage in Victoria hits Altona

On 25 September 1998, the gas installation at Longford (near Sale) in Victoria, that handles the Bass Strait gas was severely damaged by an explosion. The Kemcor operation began to operate at less than 20 per cent capacity. 

Overview (notes and updating required)

The Altona petrochemical complex is now dominated by Qenos a joint venture of of the form Kemcor and Orica producing polyolefins and synthetic rubber. 

The complex may be historically broadly split between two groups of companies (though increasingly moving to just one with the domination of Kemcor Australia);

bulletGROUP 1. Polyolefin and rubber operations using the C2 and C3 feedstocks produced from two crackers. bulletGROUP 2. Operations indirectly linked to other plants and/or predominantly reliant on imported raw materials. Group 2 is today a vestige operation reflecting its inherent high cost nature initially enabled by tariff protection. Today group2, including PVC manufacturing has largely ceased production.


There are two principal sources of feedstock; bulletGas oil (ex PRA refinery, now Mobil Altona Refinery) used in cracker (SCAL 1) to produce ethylene (80 000 tonnes), propylene (about 50 000 tonnes) and C4 (about 20 000 tonnes, commissioned 1961. bulletBass Strait ethane feedstock for the SCAL 2 cracker (100 000 tonne ethylene capacity, commissioned 1971).

Less than 60 per cent of the ethane available to Altona is used (one study suggests that supplies could increase by two-and-a-half times by year 2000. Eco Systems study of August 1990 prepared for the Victorian Government said only 10 petajoules of ethane is extracted while 25 petajoules would be available by year 2000. One petajoule is about 20 000 tonnes of ethane.).  

The ethylene is used to produce LLDPE, LDPE and HDPE in three plants (up to 75 000 tonne capacity), three by Kemcor including the plant formerly operated by Hoechst. (In January 1997, Hoechst sold its polyolefin operations at Altona to Kemcor Australia.) In buying Hoechst Australia operations, Kemcor is now the sole manufacturer of HDPE resin in Australia while sharing the market with ICI for polyethyelenes and polypropylene with Basell Australia.

The small SCAL 1 cracker is justified at Altona despite access to cheaper ethane (as used by the SCAL 2 cracker) as it produces propylene the polypropylene plant about 45 000 tonnes (formerly operated by Hoechst) and C4 for the two small three decade old synthetic rubber plants (25 000 tonnes SBR and 10 000 tonnes BR). (The SBR plant was closed in 2000)


Plants are below one-third world-scale - the largest is the HDPE unit (capacity 75 000 tonnes, formerly operated by Hoechst). The complex therefore incurs scale-related operating cost penalties but is competitive by access to competitive feedstocks and with prices above world levels (though at import parity) through tariffs and anti-dumping protection. Exports are variable but typically less than 15 per cent.

Production scales for Australia's petrochemical plants.

Outlook (requires updating)

GROUP 1 Companies In 1992, Kemcor consolidated the management of three companies comprising, APC (feedstock manufacturer), Compol (using some two-thirds of ethylene produced) and ASR (producer of synthetic rubber).In 1997 Kemcor acquired the polyolefin operations of Hoechst that had hitherto purchased ethylene C3 and from Kemcor to produce HDPE resin in competition with Kemcor and the use of its facility to alternatively produce polypropylene resin.

The formerASR company producing synthetic rubber (SBR and BR) has an outlook influenced by the SCAL 1 unit as supplier of the C4, in turn influenced by the viability of the C3-using polypropylene plant SCAL 1 supply restraints requires about 20 per cent of the required butadiene to be imported (Dow using imported butadiene). The SBR plant requires styrene that is imported or supplied by Huntsman at West Footscray (produced from benzene (or BTX) about 80 per cent of which is imported).

Using two small plants built 1961 and 1964, it has a future dependent on the viability of the SCAL 1 cracker that also is justified against a larger SCAL 2 by providing C3 for the polypropylene plant. (The cessation of propylene production was raised in European News of 15 February, 1993, page 4).

Altona's SCAL 1 cracker is three decades old (though technically efficient), small and without any feedstock advantage. Given scope for expanding or replacing the SCAL 2 cracker (using cheaper ethane feedstock), SCAL 1 remains in production as it supplies about 80 per cent of Altona's requirements of butadiene, and propylene for the polypropylene plant. Further reductions in assistance would expose the fundamental weakness of the synthetic rubber plant that could in turn promote the closure of SCAL 1 and cessation of of polyproylene production.

If SCAL 2 were to be expanded/replaced as proposed in 1989, the application of ethylene feedstock between LLDPE, LDPE and HDPE is likely to be directed to HDPE and LDPE.

GROUP 2 Companies This group consisted of Dow, BASF and Australian Vinyls Corporation (owned by Orica 62.6% and Geon (before that BFGoodrich) that are small, weakly linked manufacturers at Altona.

Dow Chemical (Australia) Ltd

In 1993, Dow closed its minuscule styrene synthesis plant. Built in the 1960s, it operated at increasingly uncompetitive scale using costly to transport imported benzene feedstock. Its closure released some baseload home market that is or could be supplied by 60 per cent of Huntsman's surplus styrene monomer that is currently exported at marginal terms. In other words, Dow's closure of its styrene plant has contributed to an increase in national production efficiencies - part of the unwinding process from Australia's protectionist era. Their polystyrene and SB latex plants remain in operation with a joint manufacturing marketing operation with Huntsman called Polystyrene Australia.

Dow's polyol plant uses imported propylene oxide competitive through the bulk increasing manufacturing process (using water and low value chemicals).

In January 2007 the polystyrene plant was closed that had been purchasing styrene from Huntsman at West Footscray. It had a capacity of 35 000 metric tons and by that time employing just 17.

Dow and Huntsman agreed to dissolve the polystyrene marketing joint venture formed in 1996:

November 22, 2006

Dow Chemical (Australia) Limited (DCAL) and Huntsman Chemicals Corporation Australia
Pty Limited (HCCA), joint shareholders of Polystyrene Australia Pty Limited (PSA),
announced today they will end the joint venture's sales activities by December 31,

PSA, formed in 1996, is a 50:50 marketing joint venture between DCAL and HCCA, which
markets and sells polystyrene resins produced in both parent companies' polystyrene
plants located in Melbourne, Australia.


BASF has closed its expanded styrene foam (Styropor) business in 1995 and purchased the latex emulsion business of Huntman to produce styrene butadiene (styronal carboxylated styrene butadiene) dispersions for backing of carpets and paper coating applications. (The styrene is purchased from Huntman, or imported, and the butadiene from Kemcor).

BASF also produces acrylic dispersions from imported acrylic esters in competition with Rohm and Haas. The acrylic emulsions are sold to paint and adhesive manufacturers.

Dispersion agents are also produced used to prevent pigment settling out in paints, stabilising slurries in mining operations and the prevention of scale build up in water cooling and heating processes.

Since 1993, BASF produces colourant dispersions for use in paints and textile printing.

Note dispersions. Dispersions are also referred to as synthetic latex or aqueous polymers, and are produced from monomers (acrylic and styrene butadiene) which are emulsified in water, polymerised to form the dispersion of fine polymer particles. These can be used to contain pigments in paints, coatings and in adhesives.

At Noble Park Victoria, BASF also operates a plastics compounding plant since 1982 blending plastic polymers with pigments, fillers and other additives. There is also a colourant masterbatch operation.

Australian Vinyls Corporation

The Australian Vinyls Corporation was formed in May 1997 comprising Orica (former ICI Australia) 62.6 per cent and the former Auseon 37.4 per cent (owned by the large US-based Geon Corporation and before that BFGoodrich). (The Geon Company is one of the largest suppliers of PVC resins in North America and is the world's largest provider of PVC compounds. Headquartered in Avon Lake, Ohio, The Geon Company and its subsidiaries have manufacturing plants in the United States, Canada and Australia and joint ventures in Europe and Southeast Asia.) The Geon interest was later acquired by US PolyOne Corp.

The shareholding is in proportion to their production capacities of Auseon's 90 000 tpa at Altona and 140 000 tpa at ICI's Laverton plant. Both operations import vinyl chloride monomer, which is a halocarbon trucked from Geelong conveyed and stored in special vessels at Altona (Geon's former plant) and at ICI's operation at Laverton. It supplies around 90 per cent of the Australian market. In 1998, Australian Vinyls achieved a 26 per cent return on assets.

The polymerisation of VCM is relatively simple and capital intensive but it enables the manufacture of the resin to local market requirements. Its operation is sensitive to remaining tariff and anti-dumping legislation.

ICI had closed its VCM synthesis operations at Botany (in favour of EDC exports) in 1996 and then in 1997 closed its EDC synthesis plant. The joint venture is the inevitable outcome of ICI's stronger position in the plastics resins market that was taking market share from its competitor.Australian Vinyls Corporation. In May 1998, Orica indicated it wishes to sell its shareholding (valued at ca. A$150m - but in July 1998 announced it would defer the sale of its shareholding) and there are plans to float the company on the Australian sharemarket. Orica subsequently wrote off A$70m in 2001.

On 2 Jun 1998, the owners of Australian Vinyls Corp (Orica with 62.6% and Geon with 37.4%) announced the decision to put all of their shares on offer to the public. The offer was not successful.

In February 2001, AVC was sold for one-third its book value at just A$40m to a consortium led by its former CEO Mr Murray Winstanley, and Kerry Packer's investment trust CPH Investment. (Note Kerry Packer's investment in Huntsman Corporation. The sale did not include AVC's compound business that represents about one-third of the business. The Altona plant will close (with loss of 44 jobs) with production concentrated at the Laverton North plant.

Following the sale, the Resins and Specialty Products businesses will continue to operate as Australian Vinyls Corporation Limited. Orica and PolyOne will retain the PVC Compounds business, including production facilities at Mentone, Flemington and Deer Park which will operate as Welvic Australia Pty Ltd.

See Altona history

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