JG Summit Holdings Inc., the investment company of tycoon John Gokongwei, on Friday disclosed a plan to invest another $600 million to expand its petrochemical plant in Batangas province.
JG Summit president and chief operating officer Lance Gokongwei said in an interview following the annual stockholders meeting the company had commissioned a study for the planned expansion of the naphtha cracker facility.
The expansion project aims to boost ethylene production to 500,000 metric tons a year from the current annual capacity of 320,000 MT. The company expects to start the expansion project in 2017 and complete it by 2019.
The petrochemical facility is operating at 85 percent run-rate. The company aims to increase this to a range of 95 percent to 100 percent this year.
The planned expansion is based on the company’s expectations that demand for plastic products would increase as the domestic economy continued to grow.
JG Summit’s $1-billion naphtha cracker facility at a 250-hectare property in Batangas became fully operational in 2015. The facility is expected to deliver $1 billion in annual revenues for the group starting this year.
“Given JGSPG’s positive performance and growth outlook moving forward, plans are underway to increase the naphtha chartering capacity and to diversify the cracker product portfolio further via the introduction of new extractions units to produce aromatics and butadiene,” JG Summit said.
“With olefins production expected to increase with an expanded cracker, additional polymer units capacity of producing higher value polyethylene and polypropylene resins are also being pursued,” it said.
Gokongwei said the company would finance the expansion project, using internally generated cash flow and borrowing.
“We’re confident that through a combination of internally generated cash flow and borrowing, the petrochemical business will be able to fund this expansion,” Gokongwei said.
Meanwhile, Gokongwei said the conglomerate was committed to support “action-oriented’’ President-elect Rodrigo Duterte’s bid to further expand the economy.
“In my personal capacity, as head of JG Summit, our group will continue to help the incoming president achieve his goals for the country,” Gokongwei said.
Gokongwei did not answer queries on whether he was really offered the post of Finance secretary by Duterte.
“The president has real mandate from the people. He got true love for the country and is action-orientated. He has selected a Finance secretary, which is [Carlos] Dominguez, who’s competent and trusted by both business community and the president,” Gokongwei said.