JV Finalised: New Era for Orica Polyethylene

1st July, 1999

Orica Limited has announced that its proposed polyethylene joint venture (JV) with Kemcor Holdings Pty Ltd is now finalised and will formally commence today, July 1. The combined operations will manufacture the complete range of polyethylenes as well as polypropylene, synthetic rubber and engineering plastics. It will also supply a broad range of imported specialty polymers, including metallocene polyolefins. Kemcor is a joint venture between Exxon Chemical Olefins Australia and Mobil Australia Finance Company Pty Ltd.

The new JV will have combined sales of A$700 million a year. Orica will have a 50 per cent interest in the new company.

Orica managing director and chief executive officer Mr Philip Weickhardt said, "Our goal has always been to deliver improved efficiencies, greater profitability and a more internationally competitive Australian plastics manufacturing industry.

"To this end, we are delighted to announce the start-up of the new JV which represents further restructuring of our plastics portfolio to maximise returns for our shareholders.

"Australian manufacturers face strong global competition and the best way we can respond to these challenges is through this type of industry restructuring. Such fundamental self-help is the only way we will be able to create the type of efficiency gains essential to producing a viable, competitive plastics manufacturing industry."

The JV will now rank in the top 20 for ethylene and polyethylene capacity in the Asia Pacific region.

Mr Weickhardt said that customers will benefit from the reorganisation: "Through the JV’s combined product range, backed by excellent customer service, I am confident we will achieve our aim of being the supplier of choice to both existing and new customers. There is also new scope for product and operational innovation through manufacturing synergies."

The Orica businesses directly involved in the JV are the Polyethylene business, which includes the Olefines (ethylene/propylene), Alkathene (low density polyethylene or LDPE) and Alkatuff (linear low density polyethylene or LLDPE) plants at Botany in New South Wales, as well as the Engineering Plastics business which has operations at both Brookvale in New South Wales and Laverton in Victoria.

The whole of the Kemcor business is involved in the JV. This includes Kemcor Olefins (ethylene/propylene), Kemcor Plastics (high density and low density polyethylene and polypropylene) and Kemcor Elastomers (styrene butadiene rubber and butadiene rubber). These operations are all based at Kemcor sites at Altona, Victoria. Kemcor is also the distributor of polymer products from Exxon, Mobil (including Mobil Films), Goodyear, Advanced Elastomer Systems and Dexco. Mr Bob Fairley, the current managing director of Kemcor, has been appointed managing director of the JV.

The new venture will continue to manufacture and market all current products, primarily for the Australian and New Zealand markets, and initially employ around 1200 people.

A name for the new JV entity will be unveiled later this year. "This is a new company, heading into a new millennium, and we believe a new name is appropriate," said Mr Fairley. Until then, the new company will operate as Kemcor.

"Bringing together two large organisations like Kemcor and Orica's plastics business has been a major effort, involving many people and processes," said Mr Weickhardt. "It is a credit to our people that this has been achieved without disruption to our customers. Our customers have remained our top priority throughout this process."