Essar Chemicals in JV with US firm

Essar Chemicals, part of the diversified Essar group, and Eastman Chemical Company have announced the signing of a memorandum of understanding and the completion of a joint feasibility study on potential opportunities for the production of oxo and oxo derivatives in the country.

Eastman manufactures and markets chemicals, fibres and plastics worldwide. It is the world's largest producer of PET polymers for packaging and is a major supplier of cellulose acetate fibres. Founded in 1920 and headquartered in Kingsport, US, $7 billion Eastman is a Fortune 500 company.

Once the MoU is converted into an agreement, both the companies will chip in a combined $125 million (nearly Rs 560 crore) in the project. The 50:50 JV will set up an oxo chemicals plant at Essar's refinery site in Vadinar.

Essar Chemicals will be the group's vehicle to enter the value-added chemicals business. It is evaluating various options available based on feedstock streams from Essar Oil's refinery in Vadinar near Jamnagar in Gujarat.

Anshuman Ruia, director, Essar group, said: "The proposed venture would further enhance the potential of Essar Oil's refinery from where main feedstock propylene will be supplied to oxo and oxo derivatives complex. Joining hands with Eastman to implement the project is the first step in the value chain integration of Essar's refining business."

According to Robert J Preston, vice-president and managing director of Eastman's Asia-Pacific region, the JV will enable the company to expand its presence in India.

The feasibility study includes plans for a 150,000 tonne per year oxo aldehyde plant and its derivatives. Oxo and oxo derivatives are part of Eastman's performance chemicals and intermediates segment. These intermediates are used to manufacture a variety of end-use products such as coatings and paints, solvents and plasticisers.

Essar is a conglomerate operating in six business areas "" steel, oil and gas, power, telecom and BPO, shipping and construction "" with an asset base in excess of $6 billion. It has over 50 representative offices worldwide and employs approximately 15,000 people.