Information on the Target

The joint venture, Braskem Siam Company Limited, is a collaboration between Braskem, a leader in biopolymers globally, and SCG Chemicals, a prominent petrochemical company in Thailand and Southeast Asia. This venture, pending regulatory clearance and a final investment decision, is set to develop a facility that will produce bio-ethylene through the dehydration of bio-ethanol and will focus on commercializing I'm green™ bio-based Polyethylene, utilizing advanced EtE EverGreen™ technology. This technology is a product of the partnership between Lummus Technology LLC and Braskem B.V.

I'm green™ bio-based Polyethylene stands out as a sustainable alternative to conventional plastics, being derived from ethanol sourced from sugarcane rather than fossil fuels such as naphtha. This shift significantly diminishes the carbon footprint of the plastic, contributing positively to climate change efforts. The material finds utility across various sectors, including food and beverage packaging, personal and home care products, and more, while maintaining its recyclability through mechanical and chemical processes.

Industry Overview in Thailand

Thailand's petrochemical industry, a vital segment of the nation's economy, demonstrates substantial growth due to mounting domestic and international demand for sustainable materials. The government has championed initiatives to promote a circular economy, aligning with global trends towards sustainability. The industry is now witnessing a significant pivot towards bio-based solutions, driven by increasing consumer preference for environmentally friendly materials.

As the demand for biopolymers escalates in Asia, manufacturers are under pressure to innovate and adopt greener practices. This trend is particularly visible in sectors such as packaging and consumer goods, where eco-consciousness has surged among consumers. Notably, Thailand's strategic commitment to environmental sustainability fosters a conducive environment for venture partnerships focused on green technology.

The long-term vision of Thailand’s chemical sector is to advance bio-circular-green economy principles, with organizations aligning their business strategies with ESG (Environmental, Social, and Governance) standards. This evolving landscape presents significant opportunities for companies like Braskem and SCG Chemicals to innovate and capture market share in the burgeoning biopolymer segment.

With its well-established infrastructure and expertise in petrochemicals, Thailand serves as an ideal hub for sustainable production. The synergistic collaboration between local and international players can effectively address the growing appetite for green solutions across Southeast Asia and beyond.

The Rationale Behind the Deal

The joint venture between Braskem and SCG Chemicals is strategically designed to leverage the strengths of both companies to meet the accelerating demand for sustainable plastic alternatives. By establishing a bio-ethylene production facility in Thailand, the partnership aims to produce 200 kilotons of I'm green™ bio-based Polyethylene, thereby nearly doubling the global capacity for this innovative product.

This collaboration not only capitalizes on Braskem's technological advancements but also on SCG Chemicals' market reach and operational expertise in Southeast Asia. Aligning these resources is a key factor in satisfying the rising consumer demand for eco-friendly products, positioning the joint venture as a leader in the green polymer market.

Information about the Investor

Braskem is recognized as a global pioneer in the production of biopolymers and is dedicated to sustainability and innovation within the petrochemical industry. With a workforce of 8,000 employees, Braskem boasts a comprehensive portfolio of products that serve multiple sectors, including food packaging, automotive, and healthcare. Its substantial net revenue highlights its robust global presence, exporting to over 100 countries and aiming to further enhance its sustainability initiatives.

On the other hand, SCG Chemicals stands as a leading integrated chemical company in ASEAN. With a focus on developing innovative solutions that adhere to ESG standards, SCGC integrates sustainability into its core operations. It excels in producing various plastics and is committed to advancing its green product portfolio as part of its strategic objectives to capture emerging market opportunities.

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From an investment perspective, the joint venture between Braskem and SCG Chemicals represents a forward-thinking move in the burgeoning bio-based materials sector. The increasing global emphasis on sustainability aligns perfectly with the venture's goal to produce a significant volume of bio-based Polyethylene, a material that is gaining traction among environmentally conscious consumers.

The collaboration leverages Braskem's innovative technology and SCG Chemicals' established market presence in Southeast Asia, creating a formidable alliance poised for growth. This venture not only strengthens Braskem's commitment to its sustainability targets but also SCG's ambition to expand its green innovation significantly, potentially capturing crucial market share in the Asia-Pacific region.

Furthermore, with the growing legislative focus on reducing plastic usage and promoting sustainable materials, the timing for this investment could not be more apt. The joint venture is strategically positioned to capitalize on these trends, making it a potentially lucrative investment in the long term.

However, investors should monitor any regulatory hurdles that may arise as the joint venture awaits anti-trust clearance. If successful, the venture could solidify the participating companies' positions in a rapidly evolving industry focused on sustainability, enhancing both their reputational value and market competitiveness.

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