(Updates to add Mexichem’s comment in third paragraph.)
June 28 (Bloomberg) -- Petroleos Mexicanos, Latin America’s largest oil producer and Mexichem SAB plan to invest $556 million to create a petrochemical company in a joint venture to increase production of vinyl chloride monomer.
Pemex, as the state-owned company is known, is requesting approval for the joint venture from the nation’s antitrust agency, the Mexico City-based company said on its website. Vinyl chloride is used to make plastic pipes, packaging and products for wire and cable coatings.
Mexichem, the Latin American chemical producer which has bought more than 15 companies since 2007, will contribute about 60 percent of the investment to create the new company, spokesman Enrique Ortega said today in a telephone interview following the announcement.
Profit at Mexichem has nearly quadrupled in four years after takeovers that include the $350 million purchase of Ineos Fluor from Ineos Group Holdings in March 2010, according to company filings. The deal made Mexichem the largest producer of calcium fluoride, a refrigerant component, the company said at the time.
In October 2010, Mexichem’s board approved about $1 billion in investment in the state of Veracruz to expand its domestic production of VCM, with the option to increase the amount by $500 million if a joint venture with Pemex was reached, former Chairman Antonio Del Valle Ruiz said in a Nov. 24 interview.
Mexichem, based in Tlalnepantla, Mexico, wants to reduce its dependence on third-party vinyl chloride producers such as Dow Chemical Co., Ortega said.
With the joint venture, Pemex’s vinyl chloride production will increase to more than 400,000 tons annually by 2013, which represents a 116 percent increase from 2010, the company said. The increased output “will translate in an important improvement of Pemex’s financial results,” the Mexico City- based company said in the statement.
--Editors: Jonathan Roeder, Donna Alvarado
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