New investment in Thailand by the Japanese trading and industrial firm Mitsui & Co Ltd is aimed at serving its Asean expansion strategy in line with the upcoming regional integration.
Thaioil’s Mr Veerasak (left) and Mitsui’s Mr Okamura shake hands at yesterday’s press conference held to announce their US$400-million joint venture. PORNPROM SATRABHAYA
Mitsui together with Thailand's largest oil refiner Thaioil Plc (TOP) yesterday announced a US$400-million joint venture factory for the production of linear alkylbenzene (LAB), a main ingredient in detergents.
The fully integrated facility will be the first of its kind not just in Thailand but also Southeast Asia.
Kazuya Okamura, Mitsui's chief operating officer for basic chemicals, said the company wants to shift production of LAB from Japan to Southeast Asia due to rising demand in the region, particularly Thailand.
"We are happy to have a reliable partner to do business with," said Mr Okamura.
The two firms recently set up Labix Co, with registered capital of 4.6 billion baht. Thaioil owns 75%, with the rest divided between its wholly owned Thai Paraxylene Co and Mitsui.
Mr Okamura said LAB production will at first be mainly for Thailand, which is used as a detergent production base by consumer product manufacturers such as Kao, Lion, Unilever and P&G.
Remaining output will be shipped to neighbouring countries, particularly Myanmar, Vietnam and the Philippines.
"The Thai government plans to develop the country into a leading industrial production base within the region, and our LAB production will be part of this," said Mr Okamura. "We're stepping up to be the leader in detergent production for Southeast Asia."
Labix expects revenue of 6 billion baht in its first full year of operation, split equally between domestic and export markets.
Thaioil chief executive Veerasak Kositpaisal said the factory is still in the design stage, but construction will start next month.
Factory operations will start in the third quarter of 2015 with annual capacity of 100,000 tonnes.
The plant will be adjacent to Thaioil's petrochemical and refinery complex in Chon Buri's Si Racha district.
Mr Veerasak said annual demand for LAB in Asean totals 400,000 tonnes.
But LAB production falls short of that figure, resulting in the region having to import 250,000 tonnes of LAB per year from Taiwan, Japan and the Middle East.
Annual demand in Thailand alone is 76,000 tonnes worth 4 billion baht.
At present, Asean's only LAB factory is the one in Indonesia, but it must import benzene derivative as a feedstock, said Mr Veerasak.
"This new factory will be the first fully integrated one in the chain of LAB production, as we can produce benzene here at our aromatics plant," he said.
Shares of TOP closed on the Stock Exchange of Thailand yesterday at 67.50 baht, up three baht, in trade worth 831 million baht.