The decision of growth
Prospects of increased demand for PVC lead Braskem to expand production capacity for that product
Written by Simone Goldberg Photos by Almir Bindilatti & Eddy Ferreira

Brazil’s leading PVC producer, with 56% marketshare, Braskem plans to increase its production of the thermoplastic resin to 630,000 tonnes (metric tons) by 2007, in response to the upturn of the Brazilian economy. The first step the company is taking this year involves its manufacturing unit in the municipality of Marechal Deodoro, 23 km from the northeastern city of Maceió, Alagoas. Braskem plans to invest approximately BRL 90 million in the facility to add 50,000 tonnes to its output by 2005, when it will be producing 254,000 tonnes annually. That milestone will mark the end of the first stage in the three-part expansion plan carried out over the next three years, each stage of which will add 50,000 tonnes to the company’s output.

Braskem currently produces 480,000 tonnes of PVC. In addition to its Alagoas plant, the company has two other PVC manufacturing units: one in Camaçari, with a capacity of 250,000 tonnes per year, and another in São Paulo, with an annual production capacity of 30,000 tonnes. The Alagoas unit was chosen for the first stage of the expansion project because it has a competitive advantage that is hard to beat: fully integrated local production. In Alagoas, Braskem is present in every step of the production chain, up to and including the manufacture of PVC: it extracts salt from mines, uses electrolysis to obtain chlorine at its chlor-alkali unit in Macieó, and, by mixing ethylene and naphtha, the same unit produces dichloroethane, which is used to make PVC.

Bernardo Gradin, the officer responsible for Braskem’s Vinyls Unit, explains that the decision to increase the company’s PVC output was based on growth prospects for consumption of the resin in the next few years. Historically used in civil construction, PVC has taken on a new marketing profile and gained space in areas that previously used other kinds of resins or materials: agribusiness, footwear, food packaging, cosmetics and hospital supplies. “By taking this initiative, Braskem is demonstrating its belief that a new economic boom is beginning in Brazil, and reaffirming its commitment to making Brazil’s plastics production chain even more competitive,” observes Bernardo.

>> Brazilian PVC market

Brazilian consumption of PVC per head is substantially lower than other parts of the world (see box). In the specific case of Brazil, two situations partly explain this difference and bolstered Braskem’s decision to increase production: the nation’s housing deficit, which, according to the Brazilian Historical and Geographic Institute (IBGE) totals more than 6.65 million units, and the public sanitation deficit. Today, the percentage of households with sewer connections is 85.6% in the Southeast, 72.9% in the South, 57.8% in the North, 45% in the Mid-West and just 42% in the Northeast.

>> Brazil’s PVC consuption is well below other countries

According to Manoel Carnaúba, the officer responsible for Manufacturing at the Vinyls Unit, increasing Marechal Deodoro’s PVC output by 25% will not require the construction of a new plant. In fact, none of the three expansion modules involves building new factories. Output will be increased through process de-bottlenecking, which includes the installation of newer equipment, revitalizing other pieces of equipment and automating more segments of the plant.

In addition to carrying out these de-bottlenecking measures, Braskem will also install a new cracking furnace at Marechal Deodoro. “Braskem owns all the technologies being used to increase production at Marechal Deodoro. The company has built up expertise over the years and mastered all the secrets of this business,” underscores Manoel Carnaúba.

The Marechal Deodoro manufacturing plant has been operating for 15 years, and in addition to the current expansion, it will also benefit from another 50,000-tonne module by 2007. The timetable for Braskem’s plans to achieve a total PVC output of 630,000 tonnes will be carried out as follows: stage one (50,000 tonnes/year), by the middle of 2005; stage two (another 50,000 tonnes/year), between the beginning of 2005 and the middle of 2006, carried out at the Camaçari unit in Bahia; and stage three (an additional 50,000 tonnes/year), between the middle of 2005 and 2007, at Marechal Deodoro, Alagoas.

As a result, Braskem will be producing 300,000 tonnes of PVC at each of its units in Bahia and Alagoas by 2007 (plus 30,000 tonnes in São Paulo). However, Manoel Carnaúba stresses that, to make these plans happen, some conditions must first be met. “The decision to carry out the next stages of this expansion project will be based directly on the growth of the Brazilian economy and international market conditions.”

The first stage of the expansion program will create 500 job opportunities in the civil construction industry. When the unit is operational in 2005, the plant will hire another 50 members and provide indirect employment for 80 more people. Today, the unit has about 180 job positions. Additional output will also bring in added income – over BRL 100 million annually.