Chemical and advanced materials company
) has signed a Memorandum of Understanding (MOU) with Pertamina,
the state-owned energy company of the Republic of Indonesia, to
develop fuel ethanol projects in Indonesia.
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The MOU chalks out the parties' plans to establish a joint
venture where Celanese will hold a majority stake and license its
leading TCX ethanol process technology under a separate
technology licensing agreement.
Pertamina, pursuant to its long-term strategy to develop new and
domestic energy capabilities in Indonesia, will collaborate with
Celanese to develop synthetic fuel ethanol projects using the
latter's proprietary TCX ethanol process technology.
The objectives of the previously declared Joint Statement of
Cooperation, which include identification of potential production
locations, evaluation of coal supply options and execution of an
ethanol distribution strategy, have been successfully completed
by the parties. However, the detailed financial terms of the
partnership for the development of fuel ethanol projects in
Indonesia are yet to be finalized.
Areas to be addressed under the detailed project planning phase
include selection of production location, start of project
permitting, and negotiation of coal supply and other industrial
partner agreements. The partners expect the capital investment
and financial returns to be consistent with the previously
declared fuel ethanol projects, as referred by Celanese earlier.
Celanese and Pertamina expect the detailed project planning phase
of the MOU to complete by the end of 2013. The projected fuel
grade ethanol production is expected to start approximately 30
months after receiving all necessary government approvals and the
final investment decisions by the companies.
Dallas, Tex.-based Celanese released its fourth-quarter 2012
results in Jan 2013. The company's adjusted earnings (excluding
one-time items) for the quarter were 67 cents per share,
exceeding the Zacks Consensus Estimate of 63 cents
Sales for the quarter were $1,501 million, down 7% year over
year, missing the Zacks Consensus Estimate of $1,534 million. The
decline was due to lower volumes in the company's acetyl
intermediates segment and the Acetate footprint rationalization
in its Consumer Specialties segment. Lower pricing also hurt
Celanese expects the challenging economic conditions to sustain
in 2013. Celanese plans to cut costs and run its plants better to
counter weak demand. The company's strong presence in the
emerging markets should enable it to deliver incremental earnings
in 2013. However, Celanese is exposed to weak demand for acetyl
products, volatility in raw materials costs and currency
headwinds and has a highly leveraged balance sheet.
Celanese currently carries a short-term (1 to 3 months) Zacks
Rank #3 (Hold).
Other companies in the chemical industry worth considering are
Akzo Nobel NV
). All of them hold a Zacks Rank #2 (Buy).