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In January 2007, Huntsman Corporation announced that Huntsman
Chemical Company Australia Pty Ltd, a part of the Huntsman's Base Chemicals and
Polymers division, has completed the previously announced sale of its Polyester
Resins (composites) business assets to Nuplex Industries Ltd (Nuplex) for A$9.6
million (approx. U.S.$7.5 million) in cash plus the value of inventory and other
stock in trade at the completion date, for a total transaction value of A$20.3
million.
The transaction further includes additional consideration payable over a three
year period upon achieving certain associated earnings targets. The assets sold
include HCCA's polyesters, vinylesters and gelcoats manufacturing assets. Annual
sales from the business total approximately A$53 million.
Monsanto Australia began in the 1928 as a manufacturer of pharmaceutical chemicals and progressively diversified into chemicals made from phenol and later from benzene supplied by Australia's steel plants. Over the next two decades, production shifted from phenol to styrene-derived chemicals. Strategic alliances and its linkage helped Monsanto gain advantage over the former operations of the Australian companies Timbrol and CSR Chemicals in styrene chemicals.
After purchase by the Consolidated Press Holdings (Kerry Packer group of companies) and trading as Chemplex, it could claim to be the largest Australian-owned chemical manufacturing company. In 1993, doubts were identified about the benzene-using industry in Australia when Shell Australia was quoted in European Chemical News (17 May, page 18) as having considered a benzene extraction plant at one of its refineries but is "uncertain whether a local and dependent market can be found". Also in 1993, one-half of Chemplex was sold to the Huntsman Chemical Corporation of the USA (with sales of US$5bn in 1998) for A$70 million. In 1993 as well, Consolidated Press and Huntsman Chemical Corp purchased the USA-based Texaco Chemical.
In December 1998, Huntsman Corporation operation , purchased the surfactants business of Orica at Botany, New South Wales for A$155m. The surfactants are ethylene oxide based and includes the ethylene oxide plant (30 000 tpa capacity).
1. Styrene-based
Styrene monomer produced in an average scale plant (100 000 tonnes per year) built 1977. The plant alkylates largely imported benzene with ethylene manufactured on site. The styrene is believed to be applied as follows;
 | 15 000 tonnes (declining from over 40 0000 tpa) exported (as raw material for overseas styrene plants); |
| 50 000 tonnes polymerised to polystyrene (at maximum plant capacity); |
| 30 000 tonnes reacted into a range of styrene polymer derivatives (including ABS, SAN and polyester resins); and |
| 5 000 tonnes sold to other manufacturers. |
2. Phenol-based
Phenol is produced in a 20 000 tonne plant built 1963 largely sold to the Australian market of about 15 000 tonnes with exports of 5 000 tonnes. About 12 000 tonnes of acetone is co-produced of which about one-quarter is exported. The cumene process is used starting with benzene and propylene.
Description
| Styrene Monomer - Basic raw material for plastics and chemicals. |
| Hetron®' ArOPOITM and Crystic® |
| Austrex ® Polystyrene - used for single serve food containers (plates, cutlery cups), food packaging (including supermarket meat trays, yoghurt containers), refrigerator liners, ball point pens etc. |
| Huntsman ABS and Austran® SAN -Thermoplastics for making household appliances, refrigerator liners, food packaging. |
| Spacel® Expanded Polystyrene (EPS) - used in thermal insulation, drink cups, commercial refrigeration, decorative sculptures, produce boxes (for transport of fresh vegetables, chilled fish to overseas markets). |
| Phenol - Basic raw material for producing resins, moulding compounds, tanning materials, rubber chemicals, pharmaceutical's, etc. |
| Acetone - Chemical intermediate and solvent for paints and chemicals. |
| Resinox® and Lauxite® Phenolic Resins - binders for bonding reconstituted wood products (e.g. plywood, particleboard, LVL), foundry sands, glass for insulation, friction materials. |
| VitafilmTM polyethylene film manufactured by Huntsman Films for food and product wrapping. |
| RMAX ® EPS produce boxes, insulation for coolstores, concrete void-form. |
| Benzene and BTX about 85 per cent imported (having increased with closure of the the BHP steelworks in 1999 that supplied BTX from coal coking operations. |
| Ethylene has been supplied by Kemcor at Altona but is more recently produced on site from Bass Strait ethane with exports from surplus production capacity. |
| Propylene (for phenol production) is supplied from other plants (Shell, Kemcor or ICI). |
Its raw materials are largely imported (85 per cent of aromatic feedstock). It has exported surplus styrene and ethylene to avoid capacity underutilisation. Huntsman has said it has plans for increasing its styrene production by 40 to 50 per cent by debottlenecking and declared plans for an expansion of polyester production - both plans have been deferred. Its favourable purchase price by Huntsman Chemical Corporation of the USA will extend its prospects especially as its new half owner is a major world supplier of styrene polymers that will help overseas sales.
Changes in gasoline formulation or demand for BTX could promote the extraction of benzene from local gasoline at local refineries that could help the company. In the interim, Huntman has to compete against lower cost overseas plants located near raw material supplies. The 5 per cent import tariff and anti-dumping legislation will remain important for the company.
The phenol (and acetone) production has a weak outlook given the small scale of production, the limited local market and again dependence on imported raw materials. The import tariff and anti-dumping legislation will be important influences.
The World War two stimulated demand for many pharmaceuticals especially for newly developed antibiotics. In 1942, the West Footscray site began to manufacture a range of sulpha antibiotic drugs such as sulphanilamide and sulphaguanidine.
Although small on an international comparison, during the 1940s, the
Monsanto plant became the most elaborate chemical manufacturing plant in
Australia. The site used benzene (from BHP steelworks), sodium hydroxide
(from ICI Yarraville), sulphuric acid (from Commonwealth Fertilizers at
Yarraville), aniline (from Timbrol at Rhodes) and carbon dioxide (from
Australian Oxygen Company) to manufacture complex pharmaceutical chemicals.
The pharmaceutical chemicals produced included salicylates (aspirin),
phenacetin and acetanilide that required phenol as the starting chemical.
Phenol was also chlorinated (eg. to pentachlorophenol) for use in antiseptics
and modified, as agricultural chemicals (including 2,4-D).
Comment
Phenol was also used to manufacture phenol formaldehyde plastic resins
in competition with the ICI (Deer Park, Victoria).
Phenol, initially required for the synthesis of pharmaceuticals, formed the nucleus for the development of the West Footscray site as a major chemical manufacturing centre. From the 1940s, phenol was used to produce phenol formaldehyde, urea formaldehyde and melamine formaldehyde synthetic resins, bisphenol A, rubber chemicals (antioxidants and stabilisers), chlorophenol antiseptics, 2,4-D and 2,4,5-T herbicides.
For two decades phenol was produced using the sulphonation route.
Comment
Facing increasing demand, Monsanto sought a more cost efficient larger
scale process. Due to inadequate demand for the co-produced acetone, the
later to be adopted cumene process using benzene (available from
coking plants at BHP steel plants) was rejected in favour of a newly developed
but complex route involving cyclohexanol. The cyclohexanolbased plant was
commissioned in 1963 but five years later in 1968, it was replaced by the
previously rejected cumene process. This quarter-century old small
phenol plant is still used at West Footscray. Comment
About 12 000 tonnes of acetone are co-produced and sold of which about
one-quarter is exported.
Comment
Monsanto soon established itself in the Australian polystyrene market.
Given locally available benzene and substantial tariff assistance, the
way was clear for Monsanto to manufacture styrene.
The manufacture of styrene also requires ethylene that was then scarce,
expensive to transport and in Australia expensive as it was made by dehydrating
ethyl alcohol. In 1958 the Petroleum and Chemical Corporation (Australia)
Ltd (PACCAL) at Silverwater, New South Wales began to manufacture gas from
petroleum to supplement Sydney's domestic and industrial gas needs (which
until now had been made from coal). About one-sixth of the gas produced
was ethylene required to produce styrene. In 1961, eight years after establishing
its styrene monomer polymerisation plant in Victoria, Monsanto formed a
joint venture with PACCAL, called Australian Petrochemicals Ltd (APL) with
a plant at Silverwater to produce styrene monomer. The venture was a major
setback for CSR Chemicals .
Comments
When Monsanto (as APL) began to manufacture styrene monomer, it automatically
led to the imposition of a 40 per cent tariff on the styrene. Duty free
imports of styrene monomer by CSRC (a concession essential for its viability)
could only continue under a discretionary Ministerial Determination.
With Monsanto moving north to New South Wales in 1961, in the same year
CSRC formed a joint venture company with Dow Chemical. The venture was
to manufacture styrene and later polystyrene at the Victorian Altona complex
(only a few kilometres from Monsanto's West Footscray plant).
APL operated for thirteen years until it became uncompetitive against
natural gas (and about the time of the OPEC oil price increases that made
oil-based gas plants, such as PACCAL, uncompetitive). In 1974, APL (and
PACCAL) were closed down. For the next three years Monsanto again resorted
to producing polystyrene from imported styrene (so that for those three
years Dow had exclusive but short term access to BHP's benzene). CSRC had
by then sold its interest in the joint venture with Dow.
In 1977, Monsanto formed a joint venture with BHP called Hydrocarbon
Products Pty Ltd, and commissioned a new styrene manufacturing plant at
its West Footscray site. Monsanto's strategic alliance with BHP as its
benzene supplier, like the one with PACCAL for the supply of ethylene,
again confirmed its strong competitive position in Australia as a polystyrene
manufacturer in this instance to Dow's disadvantage.
The raw material feedstock was BTX - an abbreviation for the production
mixture of benzene, toluene and xylene produced in the coal coking process.
BTX is reformed to benzene and was now only available in Australia from
its new venture partner BHP. BHP was Australia's only manufacturer of benzene
and BTX supplying Dow for its styrene plant. (Ampol's Matraville plant,
which also produced benzene, had closed in 1974.)
In response to Monsanto's second alliance, Dow was now obliged to import
its benzene feedstock (from Japan). Monsanto found it to its advantage
to form a joint importing arrangement with its competitor Dow as it required
more benzene than BHP could supply. The required ethylene was supplied
by pipeline from the nearby Altona Petrochemical Company that could complement
or replace production from its own ethylene plant (which used ethane and
is currently in use).
Comment
In 1989, the chemical manufacturing division of Monsanto Australia (including
the plant on the Parramatta River at Rozelle, New South Wales that packaged
Monsanto's glyphosate herbicide made at West Footscray, Victoria) was purchased
by Consolidated Press Holdings (part of the Kerry Packer group of companies).Renamed
as Chemplex, it became for a short time the largest Australian-owned chemical
company. Borg-Warner Chemicals (operating at Dandenong, Victoria) was also
purchased and renamed Marplex. Marplex is a manufacturer of ABS synthetic
resins (estimated at around 15 000 tpa) using imported acrylonitrile and
butadiene, and styrene purchased from Chemplex). The purchase integrated
broadly similar technology using common raw materials.
In 1993, Kerry Packer's Consolidated Press Holdings sold a half share
of Chemplex to Huntsman Chemical Corporation of the USA for just $70 million
and will trade as Huntsman Chemical Corporation. Huntsman is the largest
US manufacturer of polystyrene operating some thirty four plants around
the world with 5 000 emloyees with a turnover of US$4bn.
Later in 1993, Consolidated Press Holdings and Huntsman Chemical Corporation
(as Huntsman Financial Corp) purchased on a 50:50 basis Texaco Chemical,
the chemical division of Texaco Inc for A$1.63 billion (U$1.06 billion,
ie. for 70 per cent of annual turnover of U$1.46 billion) to be known as
Huntsman Corp and managed by Huntsman. Texaco had been unprofitable marketing
chemicals including ethylene, propylene, and ethylene glycol as well as
additives for fuels and lubricants.
In 1995, Huntsman Chemical purchased the resins business of the US Ferro
Corp (for between $5m and $10m). Ferro manufactures pigment, paste and
polyester gel coat and Huntsman had been its major customer.
Comment
This involves sulphonation of benzene followed by the hydrolysis to
phenol. Although a comparatively inefficient process, it is still used
in some countries for small scale production.
Phenol production is about 20 000 tonnes per year of which about 5 000
tonnes (25 per cent) is exported. Previously forming the nucleus for a
broad range of chemicals at the site, phenol is now confined to the manufacture
of phenol formaldehyde moulding compounds, and is sold to other industry
(eg. to Nufarm to produce 2,4-D and 2,5-T herbicides previously manufactured
by Monsanto).
The cumene process alkylates benzene with propylene to produce cumene
as an intermediate. The cumene is oxidised to phenol with acetone as the
co-product.
Phenol is manufactured from benzene (about 17 000 tonnes of which 80
per cent is imported) and propylene (about 9 000 tonnes purchased from
Kemcor, Shell or ICI). The production of phenol therefore competes with
styrene for the limited and decreasing Australian supplies of benzene feedstock.
The phenol plant is comparatively small and operates without any international
comparative advantage so that its production may be described as a vestige
of Monsanto's previous activities.
Styrene and polystyrene
Monsanto had been purchasing benzene from BHP with access to technology
from its US blank so it was an obvious extension for it to diversify to
other benzene-derived chemicals for which substantial import tariffs were
available. This was a time of rapidly growing demand for polystyrene, with
no Australian competition and an import tariff of 40 per cent. In 1953,
Monsanto commissioned a plant to polymerise imported styrene monomer to
polystyrene synthetic resin. Two years later, CSR-Chemicals, located in
New South Wales, began to import styrene for polymerisation to polystyrene.
Paccal and Australian
Petrochemicals
The newly formed APL practically ended CSRC's entry into polystyrene
production as APL was located less than 5 kilometres from its plant at
Rhodes that had been polymerising imported styrene to polystyrene (page
116). CSRC appeared to have failed to convince PACCAL to supply its ethylene
by pipeline to its nearby Rhodes plant.
A chemical company may maintain production or capacity to produce raw
materials to provide competition or threat of competition to negotiate
favourable prices with its suppliers especially expensive to transport
feedstocks. The West Footscray plant has that capacity and can act as buffer
for the Altona complex to absorb surplus (cheaper) ethylene.
Monsanto's plant cost $70 million with a current production capacity of
about 100 000 tonnes per year of styrene. It is now of modest size so that
in contrast to most Australian chemical plants, it incurs only a modest
scale-related production cost penalty. Its major disadvantage is high cost
raw materials (see next) and the high cost broad spread of applications
for its styrene. In 1988 BHP sold its interest to Monsanto reflecting also the
reduced supplies of BTX from BHP steelworks.
Flow
chart of development of Monsanto
In 1997 it sold Marbon chemicals a manufacturer of ABS terpolymer plastics
located at Dandenong Victoria.
Huntsman Today
Raw Materials
The principal raw materials (with estimates of tonnages) are;
Benzene and BTX; about 108 000 tonnes including 17 000 tonnes for phenol
synthesis and, converted to styrene, for its Dandenong plant (Marplex).
Purchases comprise about 15 000 tonnes as BTX from the BHP steel works,
about 70 000 tonnes as BTX from South Korea, and about 25 000 tonnes of
benzene from Japan. The benzene is made from BTX using the LITOL technology. (BTX
is mixed with hydrogen (from the ethane cracker) and reacted at elevated
temperatures. The methane produced in the reaction (dealkylation) is
used as fuel.
In other words, about four-fifths of the aromatic raw materials used
for the manufacture of styrene and phenol is imported. The declining supply
from BHP is likely to have been a factor in the dissolution of Hydrocarbon
Products Pty Ltd.
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| Ethane by pipeline from Bass Strait. Their ethylene plant has a production capacity of about 30 000 tonnes per year and is an alternate source to ethylene supplied by Kemcor Australia (incorporating APC). The LUMMUS technology is used to crack the ethane with steam. |
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| Other feedstocks include, propylene (about 9 000 tonnes) supplied by pipeline from Kemcor or by road from ICI Botany or Shell at Geelong, phthalic anhydride from the ICI plant at Rhodes, and imported butadiene and acrylonitrile. |
 | About 15 000 tonnes is exported for overseas manufacturers. Until recently the amount exported from this marginal activity was about 40 000 (or 40 per cent of production). This activity helped avoid capacity underutilisation. |
| About 50 000 tonnes is used to manufacture polystyrene for the Australian market (estimated to be about 48 000 tonnes) in a small plant with a capacity of about 35 000 tonnes. |
| About 30 000 tonnes is used to manufacture a broad range of chemicals for the Australian market, including; |
| Acrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN) (about 12 000 tonnes - imports are about 4 000 tonnes), |
| Polystyrene butadiene latex, |
| Polyester resins (unsaturated normally used with glass reinforcing as used for boats etc.), and |
| Phenoplast resins (phenolic compounds using formaldehyde for electrical fittings). |
The phenol plant exports about one-quarter of its acetone and phenol (like most other exports of assisted goods, on a marginal price basis). It is a high cost unit and remains in competition through the benefits of tariffs and anti-dumping protection. As it also competes with the styrene plant for expensive imported benzene raw material and uses propylene freighted to the site, the small high cost phenol unit is vulnerable to closure with the progressive further reductions in tariff assistance.
Although it has a weak long term position, its purchase by a large producer of polystyrene will provide access to new markets, reduce marketing costs and perhaps some premium based on recognition of the Huntsman name. These advantages may provide a basis for it to add more value to its styrene, further processing it to polystyrene and other styrenics as complements to its principal's overseas-made products. During 1997, Huntsman formed Polystyrene Australia - a joint venture company with Dow Chemicals to market styrene polymer resins.
Cost saving measures is assist competitiveness as reflected in reducing employment from around 900 to below 700 persons in the last couple of years.
In summary, Huntsman Chemicals in Australia has a future as a manufacturer relying on largely imported raw material to supply a small market. It may be anticipated to remain in production helped by government assistance, a favourable purchase price by Huntsman (needs only modest profits to make a satisfactory return on their investment) and, through its new part owner, a lower cost entry into world markets (and perhaps even a small premium for the Huntsman name on its products). It would obviously be helped by the Australian manufacture of its principal feedstock benzene.
In the US, Reformulated Gasoline with reduced aromatics content, has
been promoted by legislation in some States. There is some prospect for
the extraction of benzene from petrol in Australia that could easily produce
enough production in Australia to satisfy the needs of Huntsman. Such outcome
could secure the company's future for some time. In the absence of that
development we would agree with the implication of the 1993 article where,
Shell Australia was quoted in European Chemical News (17 May, page 18)
as having considered a benzene extraction plant at one of its refineries
but is "uncertain whether a local and dependent (our emphasis) market
can be found". (Though this comment preceded its purchase by Huntsman.)
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