MOSCOW (MRC) -- Poland’s Grupa Azoty is making a USD450m entry into the global propylene market, in a move that underscores its position as one of Europe’s biggest chemical companies, said Financial Times.
The investment, the largest in the company’s history, will create Europe’s biggest production plant for propylene, a critical chemical in the production of plastics and solvents, used in a range of products including car parts, carpets and toys.
Grupa Azoty is one of only a handful of Polish business giants that has managed to turn national dominance into international clout, amid long-overdue efforts by the country’s government to encourage overseas expansion and investment in new business areas among its largest corporates.
Pawel Jarczewski, the company’s chief executive, said the investment was of "historical magnitude". "It opens up a whole new sphere for future development for the company," he told the Financial Times. "This investment confirms Grupa Azoty’s position as?.?.?.?Europe’s emerging player on the chemical market."
The new plant is capable of producing 400,000 tonnes of propylene a year and will begin production in 2019. This is expected to increase the Warsaw-listed company’s annual revenue by 20 per cent to 12bn zloty (USD3.2bn).
Europe is estimated to have a deficit of about 1,000 tonnes of propylene per year. The plant, to be built in Police on Poland’s northern Baltic coast, will export 60 per cent of its production, the company said.
"There is a significant market gap in Europe [for propylene]," Mr Jarczewski said. "This is a highly profitable project."
The investment, part of Grupa Azoty’s planned USD2bn capital expenditure push between now and 2020, is expected to be funded by new financing, but the company declined to provide details.
Grupa Azoty, which is controlled by Poland’s government, is also eyeing up as many as 10 overseas acquisitions, as part of an aggressive diversification push to catch up with global rivals. The company is evaluating takeover options in the Czech Republic, Hungary and Lithuania, as well as investment opportunities in Africa, Malaysia and South America.
The spending spree comes as Warsaw tentatively steps back from a risk-averse approach to managing its state-run enterprises, in a tacit acknowledgment that the country’s national champions lag behind their global rivals and must expand internationally in order to stay competitive.
KGHM, a Polish state-controller copper miner, snapped up mines in Canada, the US and Chile in 2012, state-run petrochemical company PKN Orlen bought a Canadian oil and gas producer last year, and PKO Bank Polski has been given the green light to start operations in the rest of Europe.
Poland’s treasury minister Wlodzimierz Karpinski, who ultimately oversees the government’s investments, said in a statement that he supported Grupa Azoty’s "innovative investment of strategic importance for the country and the continent".
As MRC informed earlier, Grupa Azoty has signed a contract with Uhde Inventa-Fischer of Germany under a project to construct a new Polyamide 6 Plant in Tarnow. The contract is for the purchase of licences, process design and project equipment. The capex budget for the project totals PLN 320m. The project is scheduled for completion in December 2016 and will add 80,000 tonnes to Grupa Azoty’s annual polyamide production capacity.
MRC