Chemanol mulls business expansion, govt aid for downstream industries: Chairman

Chemanol Chairman Ali Abdulaziz Alturki

Methanol Chemicals Co. (Chemanol) is studying to expand its business and leverage the government support for specialty downstream industries, Chairman Ali Abdulaziz Alturki told Argaam.

These plans require first the manufacturing of the basic materials, and transforming them into specialty products via developing a highly-efficient and low-cost value chain. Chemanol seeks to evaluate its options, works on a comprehensive strategy, and will duly reveal any updates, Alturki indicated.

Chemanol is the sector’s first company to invest in specialty and downstream industries, and not basic petrochemical products, he added.

As for the methanol plant expansion, as well as the project’s returns and cost, Alturki pointed out that the project will increase its current production capacity by 100,000 tons, or around 40%. The expansion project will aggrandize returns and cut costs, due to increasing production and rationalizing feedstock consumption.

Chemanol produces around 400,000 tons of end products, as an output of 230,000 tons of methanol is transformed into various specialty and downstream products with an operating rate ranging between 95-110%.

Commenting on Q4 2021 financial results, Alturki highlighted that Chemanol reported an actual profit of SAR 269 million for the fourth quarter of 2021. However, earnings adjusted for deducting SAR 25 million in asset impairment provisions during the period, amounted to SAR 104 million in Q4 2021.

The earnings were mainly driven by higher product prices, cost-efficiency policies, in addition to the company’s efforts on the environmental, industrial, financial, and marketing levels.

These efforts resulted in production sustainability, openness to new markets and applications, as well as production cost control and reduction, the Chairman said.

Additionally, an increase of 20% to more than 100% in some product prices has to do with the supply chains, as some regions saw a more than two-fold increase in shipping rates.

Chemanol took several significant steps to cut these costs, including the redistribution of sales and contracting new shipping companies for competitive prices.

Chemanol reported a net profit of SAR 244 million in 2021, versus a net loss of SAR 276.1 million in 2020, Argaam reported.