Abu Dhabi's Borealis seeks out new avenues for expansion

Borealis is exploring growth in North America and Russia while considering expansion into new industries as the Abu Dhabi-owned plastics maker looks to build on a US$10 billion investment in Middle Eastern petrochemical operations.

The company’s profit margins and earnings are rising while debt levels are low, making now the time for the next strategic move, Mark Tonkens, the chief financial officer, said in an interview.

A list of possible deals includes acquisitions in fertilizer and investing in the recycling industry, Mark Garrett, the chief executive, said in the same meeting.

“We started with a huge funnel of projects and are narrowing them down,” said Mr Garrett. “We’d hope to announce a few things in the next 18 months.”

Borealis is searching for new opportunities after the opening of three petrochemical complexes with Abu Dhabi National Oil Company transformed the fortunes of the Vienna-based polymer maker.

It is the best-performing asset in Abu Dhabi’s sovereign wealth fund. Net income was €988 million (Dh4.05bn) last year, compared with €38m in 2009.

“We’re now at this place where at the bottom of the cycle we should still be making good money and at the top of the cycle we can make really good money,” Mr Garrett said.

While there’s scope to generate an additional 1 million tonnes of output from the rapidly built petrochemical plants, known as Borouge, by boosting effici­ency, a waning of ethane supplies, an essential raw material, in the Middle East means it does not make sense to open another multibillion-dollar complex, the chief executive said.

North America and Russia are attractive markets for as they have gas supplies for helping process petrochemicals, Mr Garrett said. Borealis expects the volume of recycled polyolefins in Europe to almost double to 6 million tonnes by the end of the decade on tougher legislation to counter waste in the region.

Rather than taking on the job of collecting and sorting rubbish, Borealis is interested in processing used plastics to be blended with output from existing plants.

“I’m not interested in having a whole bunch of truck drivers going around collecting stuff and other guys washing and separating it,” he said.

“We want to take 99.9 per cent pure recycled polypropylene, mix it with our virgin polypropylene and still get a world-class bumper for Audi.”

Borealis may invest in some companies to raise the purity of the recycled material, Mr Garrett said. “By 2025, we need to be a different company to today.”


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