JUBAIL INDUSTRIAL CITY, SAUDI ARABIA- Midland, MI-based Dow Chemical Co. and the Saudi Arabian Oil Co. announced earlier today that it is going ahead with four-year-old plans to build a $20-billion chemical plant here. The plant will comprise 26 manufacturing divisions creating products and plastics for the energy, transportation, infrastructure and consumer products industries, to capitalize on emerging markets such as China and the Middle East.
Dow is one of the world’s most well-known chemical companies. The Saudi firm, also known as Saudi Aramco, is owned by the Saudi government. The two firms are forming a venture called the Sadara Chemical Co. The name is an anagram, with “Sa” signifying Saudi Aramco, “d” standing for Dow, and “ara” for Arabia.
The two firms will each contribute about $2.3 billion toward the investment, with another $2.3 billion planned to be raised from a stock offering for Sadara. The venture will use another $13 million of debt for the project, according to a venture statement.
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Andrew Liveris, chairman and CEO of Dow, said in a conference call about the venture today that the complex will be the largest chemical project ever undertaken. “This project will literally transform our industry, and catapult our interests in regions like the Middle East and Asia for decades to come,” he said.
Construction is to begin immediately, as engineering work has already been completed in Jubail Industrial City, one of the largest industrial complexes in the world. When complete, the new Sadara site will produce about three million tons of capacity of chemical products and performance plastics when finished in 2016, and is expected to deliver annual revenues of about $10 billion within a few years of operation.
Khalid Al-Falih, president and CEO of Saudi Aramco, said in a statement that the project represents a key milestone in the firm’s growth strategy. “Many of Sadara’s products will be produced for the very first time in Saudi Arabia. This enterprise will play a key role in the kingdom’s industrial and economic diversification, while contributing to the creation of thousands of high-quality jobs. It will enable significant development in the country’s conversion industry, thereby supporting Saudi Arabia’s ambition to be a magnet for downstream manufacturing investments that add significant value to the kingdom’s hydrocarbon resources.”
Dow, which saw its stock plummet to about $7.11 per share during the recent recession, was trading at $35.95 at 1 p.m., about a dollar per share higher than Friday’s price.
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