ICI Australia Announces $145 Million Chemicals Investment

28th October, 1997

ICI Australia today announced a $145 million investment in Chlorine and Derivatives (C&D), signalling its long-term commitment to the business.

The investment will be used to create new chlor-alkali assets in Melbourne and Sydney and expand its Gladstone plant in Queensland. The Gladstone expansion is scheduled for completion by April 1998, with the new Melbourne and Sydney plants operational in 2000.

"Our decision follows a strategic review of the Chlorine & Derivatives business,"said Division general manager Philippe Etienne. "The review concluded there is a strong and exciting case for reinvesting in the most advanced technology and positioning those assets close to major chlor-alkali regional markets.

"By replacing older facilities which have operated for up to 50 years, we will be able to achieve world-class performance in terms of energy, labour and the environment. These new plants will provide significant efficiencies which will enhance the business's world competitiveness, while overall plant capacity will remain close to current levels."

Chlorine, its derivatives and caustic soda are essential chemicals used by a wide range of manufacturing industries such as the food, steel and building industries. Chlorine is also widely used in water disinfection.

The company also announced it will close its ethylene dichloride (EDC) plant at Botany in NSW in early 1998.

Mr Etienne said, "The EDC plant, built in the 1960s, is small and inefficient by world standards. As a result of the closure of PVC manufacture at Botany in 1996, the EDC plant only makes product for export so it has been trading in a tough international market climate. The plant's uncompetitive performance has been exacerbated due to its reliance on chlorine feedstock from ageing assets.

"After careful consideration of current and long-term economics," Mr Etienne said, "it is clear that the EDC business will not provide the necessary return to justify the additional capital required to supply chlorine to this plant from the new assets."

Mr. Etienne confirmed that the reshaping of the business would result in some job losses. "Regrettably, the loss of some jobs is an inevitable outcome of developing a strong ongoing business. However, we will ensure that those people affected are fully supported to find alternative employment," he said.

ICI Australia managing director Philip Weickhardt emphasised that the reshaping of the Chlorine & Derivatives business was a further step in the company's program of investing in businesses with strong strategic positions and rationalising those activities that can no longer provide good future earnings.

"The Melbourne and Sydney plants have served us well for decades, but the time has come to re-invest in the future of the chlorine business," Mr Weickhardt said.

"We will unswervingly work on our portfolio until all our businesses are genuinely and sustainably competitive. We are confident that this latest investment will give us modern, efficient, strategically-located assets that will enhance our strong position in the Australian industrial chemicals for years to come."