Wednesday, 16 July 2008

180 jobs affected as SABIC Europe closes plants at North Tees and Wilton

SABIC Europe today announced plans to re-structure its aromatics operations based on Teesside, UK following a wide-ranging review of the long-term viability of the business.

The plans involve closure of the Aromatics 2 unit at the SABIC UK Petrochemicals North Tees Site near Seal Sands and the Paraxylene plant at the Wilton Site near Redcar. The plans also include an upgrade of the remaining Aromatics 1 plant at North Tees.

The economics of the units planned for closure have become untenable and have forced SABIC Europe to face up to this difficult decision. The aim of the proposed way forward is to bring the total SABIC UK Petrochemicals Teesside Site operational and commercial performance to a sustainable level.

Paul Booth, President – SABIC UK Petrochemicals, commented: “On Teesside, SABIC UK Petrochemicals remains fully committed to its Olefins Cracker operations at Wilton, Cyclohexane production at North Tees and to continuing its investment in the major Low Density Polyethylene (LDPE) project at Wilton.

“We will also continue to process Pyrolysis Gasoline feedstock from our Wilton Cracker on the Aromatics 1 unit in order to optimize our Cracker operations across Teesside,” added Mr Booth.

The proposed closure of the Aromatics 2 and Paraxylene units is expected to affect approximately 200 operational and support positions. The main impact of this will be at the manufacturing facilities on Teesside, but the numbers also include some job reductions in SABIC Europe’s support functions in The Netherlands. A clearer idea of job numbers will be known once the full details of the restructuring plans are worked out. SABIC UK Petrochemicals will seek to minimize the effects through redeployment and voluntary means wherever possible.

Paul Booth added: “Our plans include seeking sanction for new capital investments to improve the total Teesside site performance, including Aromatics 1 and associated infrastructure to ensure a sustainable long term future for SABIC on Teesside.”

Further details of the restructuring will be completed over the next few weeks taking into consideration the interests of all concerned parties and consultations with employees’ representatives.

The impact on customers is under review and is subject to discussions with the relevant parties.
It is currently envisaged that the proposed closures will take effect by end 2008.

In an email to councillors Bill Perfitt Director, UK Public Affairs SABIC UK Petrochemicals wrote:

"In a nutshell, we are today announcing proposals to close our Aromatics 2 plant at North Tees and the Paraxylene plant at Wilton (which takes its feedstock of mixed xylenes from Aromatics 2). The number of jobs affected on Teesside will be approximately 180 (plus about 20 in our support operations in Sittard, southern Holland). However, as ever, we will do our best to achieve as many job reductions as possible through either voluntary means or redeployment.

"On the positive side, we are looking urgently and seriously at plans for a potential major multi-million investment to upgrade our remaining Aromatics 1 plant at North Tees in order to help secure its long term future, but this will be dependent on economic conditions prevailing in the future. In summary, we firmly believe that these necessary changes will help to strongly underpin our remain core businesses of the Olefins Cracker, our new Polyethylene operations at Wilton and the remaining Aromatics business going forwards."

About SABIC:

Saudi Basic Industries Corporation (SABIC) is the world’s 5th largest petrochemicals company. The company is among the world’s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

SABIC operates six interlinked strategic business units: Basic Chemicals, Intermediates, Specialty Products, Polymers, Fertilizers and Metals. In 2007 SABIC Innovative Plastics was launched as a global manufacturer and supplier of highly engineered thermoplastics. SABIC has significant research resources and has 16 dedicated Research and Technology and application centers in the Middle East, the Americas, Europe and Asia-Pacific. The company operates in more than 40 countries across the world with over 31,000 employees worldwide.

In Saudi Arabia, the company has 20 world-scale complexes and 19 of them are located in the industrial cities of Al-Jubail and Yanbu. Some of these complexes are operated with multi-national joint venture partners such as ExxonMobil, Shell and Mitsubishi Chemicals. Elsewhere, SABIC manufactures on a global scale in more than 45 countries in the Americas, Europe and Asia Pacific. SABIC’s overall production has increased from 27 million metric tons in 2001 to 55 million metric tons in 2007.

Headquartered in Riyadh, SABIC was founded in 1976 when the Saudi Arabian Government decided to use the hydrocarbon gases associated with its oil production as the principal feedstock for production of chemicals, polymers and fertilizers. The Saudi Arabian Government owns 70 percent of SABIC shares with the remaining 30 percent held by private investors in Saudi Arabia and other Gulf Cooperation Council countries.

About SABIC Europe:

SABIC Europe (headquartered in Sittard, The Netherlands) is a SABIC subsidiary group which includes all SABIC’s polymers and base chemicals activities in Europe and employs around 3,300 people. SABIC Europe has a European sales offices network, logistic hubs and three petrochemical sites in Europe: at Geleen (The Netherlands), Teesside (United Kingdom) and at Gelsenkirchen (Germany). SABIC Europe produces 3 million metric tons per annum of polyolefins* and 5.7 million metric tons of basic chemicals, mainly for the European market.

* including the projected numbers for the SABIC UK Petrochemicals 2008 LDPE plant.

Aromatics Product chains:

The Aromatics 1 and 2 and Paraxylene units currently operated by SABIC UK Petrochemicals on Teesside supply raw materials into different product chains, known in the chemical industry as ‘C6’ and ‘C8.’

Aromatics 1 is part of the C6 product chain, producing Benzene and Cyclohexane, which are widely used in the nylon fibre and plastics industries. Aromatics 1 is very important to SABIC UK Petrochemicals major Cracker complex at Wilton, which supplies large quantities of Pyrolysis Gasoline feedstock to Aromatics 1.

The Aromatics 2 and Paraxylene plants are part of the C8 product chain, which processes mixed Xylenes for the polyester industry and it is envisaged that as a result of the review SABIC Europe will be exiting this area.

Redeployment opportunities:

Paul Booth, President – SABIC UK Petrochemicals, said the Aromatics business had been subject to worsening economic conditions for a long time. He commented: “We have worked incredibly hard for a number of years to make the Aromatics and Paraxylene assets viable in a fiercely competitive environment.

“Our employees have also supported us strongly in our efforts and, on behalf of SABIC UK Petrochemicals, I would like to give them my very sincere thanks. I would also like to emphasize that we will make effort to treat individuals affected by this review as supportively as possible.

“In the event of redundancies, we will explore opportunities for redeployment both inside and outside the company.

In order to bring the SABIC UK Petrochemicals Teesside site to a sustainable level of performance, SABIC Europe is committed to its Cracker and Polymers operations on Teesside and will continue to invest in them to ensure their long term sustainability, including the production of Pyrolysis Gasoline feedstock for processing on Aromatics 1 producing Benzene and Cyclohexane. SABIC Europe has been and is continuing to invest significantly in its UK operations since it bought them at the end of 2006. These substantial investments are in addition to the ongoing construction of the new £200 million (250 million Euros) LDPE project at Wilton, which will be the largest of its kind in the world when completed by around the end of this year.

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