Eastman Buys Terra Assets for Coke-to-Chemicals Plant (Update2)
By Jack Kaskey
bloomberg.com
Sept. 28 (Bloomberg) -- Eastman Chemical Co., the world's largest maker of plastic for water bottles, agreed to buy factories in Texas from Terra Industries Inc. as part of a $1.6 billion plan to produce more chemicals from petroleum coke.
The price wasn't disclosed. The ammonia and methanol plants in Beaumont have been closed since late 2004, said Joe Ewing, spokesman for Sioux City, Iowa-based Terra. Eastman, based in Kingsport, Tennessee, will modify and restart the factories, spokeswoman CeeGee McCord said today.
``Exercising this option brings Eastman one step closer to construction of a new gasification facility,'' Mark Costa, Eastman senior vice president of corporate strategy, said in a statement. ``We continue to meet our targets and remain on schedule.''
Eastman has said it planned to begin producing chemicals such as methanol in Beaumont in 2011. Chief Executive Officer Brian Ferguson plans to boost sales of products made from coal and coke, a refinery byproduct, to half of output from about 20 percent. The company's Kingsport site has been making chemicals from coal for 24 years.
Eastman expects to complete the purchase of the Terra factories by Jan. 1, 2009. The deal includes about 25 acres of land, McCord said. Terra, the largest U.S. producer of liquid- nitrogen fertilizer, is selling the assets as part of a plan to focus on nitrogen production.
Shares Fall
Eastman fell $1.38, or 2 percent, to $66.73 at 4:03 p.m. in New York Stock Exchange composite trading. The shares have gained 23 percent in the past year. Terra fell 10 cents to $31.26. The stock has soared fourfold in the past year.
Eastman expects to have a 50 percent stake in the Beaumont project and own 25 percent of a similar Louisiana plant set to open in 2010, the company said in July. Petroleum coke sells for no more than coal and is usually cheaper, Ferguson has said.
The company plans to produce about 900,000 tons of methanol a year in Beaumont, as well as hydrogen and ammonia, the CEO has said. Eastman will use some of the methanol to make products such as olefins, polyesters and acetyls, and will sell the remainder. The project will use technology licensed from General Electric Co.
Eastman has said it received preliminary local approval for $100 million in incentives to locate the project in Beaumont.
To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net .
Last Updated: September 28, 2007 16:18 EDTE |
