By Jonathan Sanders
From the January/February 2016 Issue
Axiall Corp. and Lotte Chemical Corp. executives recently announced the companies will make a combined $3 billion capital investment in two new chemical manufacturing plants in Lake Charles, LA. Axiall and Lotte, through a joint venture called LACC LLC, will make a $1.9 billion capital investment in a new ethane cracker facility beside Axiall’s current Lake Charles manufacturing plants in Calcasieu Parish. Additionally, Lotte will make a $1.1 billion capital investment in a new monoethylene glycol manufacturing plant on the same site.
Combined, the projects will create 215 new direct jobs, with the ethane cracker producing 135 new direct jobs with an average annual salary of $75,500, plus benefits, and the monoethylene glycol, or MEG, facility producing 80 new direct jobs with an average annual salary of $87,000, plus benefits. Louisiana Economic Development estimates the combined projects will result in 1,892 new indirect jobs, for a total of more than 2,100 new jobs in Southwest Louisiana. With its project, Axiall will retain 1,600 existing workers in the Lake Charles area, and the company estimates 2,000 construction jobs will be created at peak building activity for the new plants.
The Axiall and Lotte announcement is the final investment decision for a project first disclosed as a potential investment in December 2013. Later, Axiall identified its investment partner for the project as Lotte, and the two companies announced a joint-venture arrangement in June 2015. Lotte will be the sole owner of the MEG plant, with construction on that site and the ethane cracker expected to begin in 2016. Upon completion of the MEG plant, Lotte plans to export more than 600 kilotons per year to customers abroad. The ethane cracker is expected to open in early 2019, with an annual capacity of 1 million tons. Axiall plans to acquire 50 percent of that plant’s output for making vinyl chloride monomer and other products.
“Calcasieu Parish was selected for this project based on the state’s skilled workforce and familiarity with the petrochemicals industry and projects of this type,” said Jim Rock, Axiall vice president for operational excellence. “Calcasieu Parish became the preferred site for a number of key reasons, including the location of raw materials, pipelines, available steam, electric power, other utilities and deepwater access. The project is needed to enhance the long-term sustainability of existing Axiall facilities by ensuring a cost-competitive, reliable source of ethylene feedstock that will enhance Axiall’s ethylene integration for its vinyl chain. Manufacturing ethylene at an Axiall-affiliated facility will contribute to the economic sustainability of our existing Louisiana plants in Calcasieu Parish and Iberville Parish.”
Axiall formed in January 2013 from the merger of Georgia Gulf Corp. and the commodity chemicals business of PPG. Axiall operates more than 25 chemicals and building products manufacturing facilities in North America, where it is the third-largest chlor-alkali producer and the second-largest vinyl chloride monomer producer. The company requires about 2 billion pounds of ethylene per year for its manufacturing operations, and the new investment will enhance Axiall’s ethylene integration for its vinyl chain.
Axiall operates facilities in Baton Rouge, Plaquemine and two facilities in Lake Charles; more than 2,300 Louisiana workers are employed by Axiall and its contractors at these locations.
Established in 1979, Lotte Chemical Corp. is a global petrochemical company based in South Korea and a member of the Lotte Group. Headquartered in Seoul, Lotte manufactures resin products, as well as basic petrochemicals and chemicals.
“Lotte’s MEG plant will be constructed on the same site adjacent to the ethane cracker,” Lotte Chemical President and CEO Soo Young Huh said. “The plant’s design capacity will make it the largest MEG plant in the U.S. The MEG products produced will be sold to customers mainly in the U.S., Europe and Asia. We expect to expand our market basis in the U.S. and Europe, in addition to our strong position in the Asian market.”
Louisiana faced competition for the projects, including from Texas for the ethane cracker, and Texas and South Korea for the MEG production facility. To secure the combined projects, the State of Louisiana offered the companies a competitive incentive package that includes a Modernization Tax Credit of $4.55 million for the ethane cracker project. Both projects will receive the comprehensive solutions of LED FastStart®, the top-ranked state workforce development program in the nation. The projects will receive Economic Development Award Program incentives of $700,000 for the ethane cracker and $1.47 million for the MEG facility to pay for site infrastructure improvements. In addition, the companies are expected to utilize Louisiana’s Quality Jobs and Industrial Tax Exemption programs.
“This announcement by Axiall and Lotte Chemical is yet another win for Calcasieu Parish and all of Southwest Louisiana,” Calcasieu Parish Police Jury President Nicholas E. “Nic” Hunter said. “As we garner national attention for our unprecedented economic growth, it is important to keep our best foot forward and continue to show that we have always been, and will remain, a great place to live, work and raise a family. Thank you to Axiall for your continued investment in our communities and to Lotte Chemical for its investment in Calcasieu Parish.
“Southwest Louisiana is proud to be the home of this new venture between Axiall and Lotte,” said President and CEO George Swift of the Southwest Louisiana Economic Development Alliance. “Our international presence is growing and this project sends a strong message that industries can thrive here in our region. We are excited to welcome this new project and the jobs and economic impact it will create. We thank Axiall and Lotte for their investment in our area, and we stand ready to work with them to make this a very successful new addition to our regional economy.”