Rio Polímeros to attract $400 million in investments

While Rio de Janeiro is the center of the Brazilian oil industry and the country''s second most important consumer market, the state''s petrochemicals and plastics transformation industries have been relatively limited for the past decade.

But the new Rio Polimeros polyethylene project, which was inaugurated on June 23, seeks to reverse this scenario. The plant has an annual production capacity of 540,000 tonnes/yr of polyethylene, increasing Brazil''s annual production by 20%, and the company is already considering increasing that production level by an additional 200,000 tonnes per year of capacity with limited investments.

With the new project, Rio de Janeiro is seeking to once again become a major player in the plastics transformation industry, which until recently had a limited presence in the state. Between 1990 and 2003, the Rio de Janeiro plastics transformation industry had retracted by 4.8% per year. The plastics industry, which was the second largest in Brazil in 1990, has fallen in the ranks and is now the fifth-largest producer in Brazil.

The new project is expected to attract more than 35 new companies to low-income regions of metropolitan Rio de Janeiro. Roughly 10 of these companies are expected to begin operations shortly after Rio Polimeros comes onstream. To date, FFS films manufacturer Poly Embalagens has announced that it will invest Real 5 million in a new production facility in the municipality of Japeri. This will be the company''s first plant in southeastern Brazil. Plastic bag producer Finoplastic has also announced investments of Real 10 million in a new plant in the region, which is expected to create 250 new jobs. Finoplastic plastics recycling subsidiary will also be setting up operations in the municipality.

Two other companies that already have operations in the region-Vibraço and Raízes-also plan to expand production due to the expansion at Rio Polimeros. Raízes manufactures plastic bags for lubricants and plans to double its production to 400 tonnes per month. Vibraço, which produces plastic packaging for the pharmaceutical and cosmetics industries, will also be expanding its production in the region.

While new transformers are setting up, Rio Polimeros will also be selling resins to other parts of Brazil and to the export market. The company has a contract with Vinmar International, a U.S.-based trading company to sell 150,000 tonnes of resin per year on the export market. Vinmar supplied Rio Polimeros with polyethylene for the past two years, which Rio Polímeros sold to clients in Brazil as part of its pre-marketing program. The goal of the program was to introduce new grades of polyethylene into the Brazilian market, which Rio Polimeros now produces in Brazil for the first time.

To attract these companies, the government of the state of Rio de Janeiro has offered a series of tax incentives. "Rio de Janeiro is Brazil''s second-largest plastics market, and we need to have a strong industry," Wagner Victer, the state secretary of energy and petroleum tells MPW. "Over the next five years, we expect to become the number-two producer as well," he adds.

Yet more advantages

In addition to proximity to one of Brazil''s most important markets, the Rio Polimeros project has the added advantage of being closer to its feedstock source. The project, which is Brazil''s first to use natural gas, is located adjacent to the Duque de Caxias oil refinery and a few hundred miles from the Campos Basin, which will supply the plant with natural gas.

"Proximity to the market and to our raw material supplier gives us a huge advantage," says Joao Brandao, the director of Rio Polimeros. "Our production costs are lower than plants which use naphtha as a feedstock," he added. Rio Polimeros is also one of Brazil''s first integrated plants, which reduces its taxes and fixed costs, Brandao added.

Another advantage of the project is its proximity to the Sepitiba port. The state government is in the process of building an export corridor, which will facilitate transportation of both finished plastics goods and raw materials from the Rio Polimeros complex. "The companies setting up in the region are already looking to the export market," Victer says.

With the presence of Rio Polimeros in the region, other companies are also considering expansion in the complex. Polypropylene producer Polibrasil has already announced plans to expand its plant in Duque de Caxias to 360,000 tonnes per year from its current 200,000 tonnes. Likewise, the company is considering build a new polypropylene plant with annual capacity of 400,000 tonnes.

"The state has offered a series of benefits to help companies set up in the Duque de Caxias region and for us it makes sense to be close to our clients and to the export market," explains Jose Ricardo Roriz Coelho, the president of Polibrasil. "We expect Rio to become a center of plastics production as well as an important export center for the industry," he adds.

The state is in talks with an additional 40 companies that are considering setting up shop in Rio if the Polibrasil plant moves forward. This is great news for the state of Rio, which like the rest of Brazil faces unemployment rates of greater than 10%. "Over the next five years, the industry could generate up to 20,000 direct and indirect jobs," Victer concludes.

Rio Polímeros is a joint venture between Brazilian petrochemicals conglomerates Unipar and Suzano Petroquimica, each with 33.3%. The remaining share is divided between Brazil''s BNDES development bank and Brazilian oil giant Petrobras, each with 17.5%.

Elizabeth Johnson [email protected]

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