MOSCOW (MRC) -- Dow Chemical has signed a long-term ethylene off-take agreement with a new Japanese joint venture that will allow the chemical producer to enhance its performance plastics franchise, according to The Wall Street Journal.
The joint venture is being formed between Japanese companies Idemitsu Kosan and Mitsui & Co. to construct and operate a Linear Alpha Olefins unit on the U.S. Gulf Coast.
Dow - the world's second-largest chemical producer by revenue - is a large consumer of linear alpha olefins and utilizes them within its performance plastics franchise for the production of high-performance materials. The company said it expects the agreement with the joint venture will enable a long-term supply and purchase relationship for linear alpha olefins, which will enhance its performance plastics franchise.
Dow billed the agreement as marking the next milestone in its strategy to integrate cost-advantaged feedstocks to support the profitable growth of its performance plastics franchise. It said the joint venture will utilize an integrated supply of ethylene from Dow's production grid on the U.S. Gulf Coast to produce linear alpha olefins used as comonomers throughout Dow's performance plastics franchise, and will contribute "significant capital" for these rights.
Financial terms of the agreement weren't however disclosed. The company noted that location options for the linear alpha olefins unit are currently being explored. Construction and start-up of the new unit is targeted for 2016.
Dow's latest announcement comes after its said last week that it is accelerating its divestiture of noncore businesses and is targeting nearly USD1.5 billion of proceeds over the next 18 months.
The chemical producer had already unveiled plans to shut 20 facilities and eliminate 2,400 jobs in Europe, the U.S. and Japan. It also is trimming capital expenditure as part of efforts to boost cost savings to USD2.5 billion from a target that had already been doubled to USD1.5 billion over the past year.
The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene (PE), polypropylene (PP), and synthetic rubber. In 2012, Dow had annual sales of approximately USD57 billion. The Company"s more than 5,000 products are manufactured at 188 sites in 36 countries across the globe.
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