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News Releases 2005
Iran/ Assaluyeh high-density polyethylene (HDPE) Project
July 2, 2005
ITOCHU Corporation is at the last adjustment stage with the parties concerned of the high-density polyethylene Project with plant capacity 300,000t/a in Islamic Republic of Iran. The total investment amounts upto 25 billion yen.
This Project is an epoch-making one in which Thai, Iranian, and Japanese companies jointly establish a joint venture company in Iran. ITOCHU contributes about 12% equity for the joint venture company through another investment company established with Thai partners. This is a long time since the last formal investment has been made in Iran by a Japanese company. Moreover, ITOCHU will also undertake a role as a Project developer with the role including, but not limited to, coordinating contractual negotiation, and arranging finance for the Project, with the close cooperation with the remaining parties.
CCC and NPCT, both leading petrochemical companies of Thailand, have been exploring an opportunity for investment into HDPE project, their main product, in the Middle East where abundant oil and natural gas resources can be found, thus procurement of raw material with competitive price is possible. This has been led by ITOCHU's initiative and introduction to the market. Having concluded number of negotiation, three companies, CCC, NPCT and ITOCHU have agreed to establish a Japanese-Thai investment company, which will acquire the majority share of the Project. Mitsui Engineering & Shipbuilding ("MES") has been appointed as EPC Contractor in consideration of their past experience in constructing three other HDPE plants in Thailand owned by CCC, and EPC Contract was signed by the parties on 15th June, 2005.
NPC will, through its subsidiaries, supply utility and ethylene and will also lease the land. HDPE produced from this Project will be exported to overseas, targeting China as main market with a size and rapid growth. It is the greatest merit of this Project to realize stable supply of the inexpensive ethylene utilizing abundant Iranian natural gas for a long period of time.
In order to finance the Project, menus such as export credit financing by Japan Bank for International Cooperation ("JBIC") supported by insurance provided by Nippon Export and Investment Insurance ("NEXI"), together with the insurance of World Bank Group Multilateral Investment Guarantee Agency ("MIGA") will be utilized.