JG Summit eyes up to $1B in new revenues

MANILA, Philippines - JG Summit Holdings Inc., the investment vehicle of taipan John Gokongwei, said it expects its naphtha cracker plant - the first in the country – to contribute between $800 million to $1 billion to groupwide revenues when it starts its first full year operations.

In a briefing following the company’s annual stockholders meeting yesterday, JG Summit president Lance Gokongwei said the plant,which will produce 320,000 metric tons of ethylene, is on track for completion by late 2013 and is expected to generate a 13 to 14 percent return on capital.

“The facility is expected to generate annual sales of around $1 billion on full production and at current prices,” Gokongwei said.

Commercial operation of JG Summit Petrochemical Corp.’s $800 million naphtha plant is slated to begin by early 2014.

Gokongwei said the group is targeting to export 25 percent of its polymer output to neighboring countries on its first full year of operations.

He, however, noted that the group’s primary market would be the Philippines, which consumes 350,000 to 400,000 tons.

Gokongwei said the group is also open to the possibility of taking in partners since the plant, located in Batangas, has additional room for expansion, enough to serve the entire requirements of the country.

Once completed, the plant will also expand the group’s existing polyethylene (PE) facility from 200,000 MT to 310,000 MT annually.

The naphtha cracker plant is expected to provide some stability to the petrochemical industry in the country, especially in the production of plastics products.

Comparatively, most ASEAN countries have more naphtha cracker plants. Thailand has nine, Singapore eight, Malaysia seven, Indonesia two and Vietnam has one.