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Tale of Two Dynamics: Low Feedstock Countries versus Low Construction Cost Countries
24 July 2019Don Bari
The chemical industry is marching forward with its spending of
$1 trillion now through 2030 to build new capacity (globally) to
meet the ever-growing demand of fundamental feedstocks and their
derivatives. As such, decisions surrounding the deployment of this
capital become ever more important as sustainability seems to be a
moving target. Sustainability encompasses many aspects beyond
investment and operating cost, which includes:
Health and safety associated with the project/operation
Environmental impact (carbon, water and plastics wastes)
Geo-political landscapes
and now much stronger socially-driven consumer pattern shifts
and influences...
While many of these aspects are outside of the control of the
operators/stake holders, the deployment of capital in an efficient
and responsible manner is within their control.
Specifically, capital investment costs continue to be at the
center of a company's long-term sustainability. This especially
takes in account the growth in the scale of plant capacities -
e.g., current announcements of nearly 2 million metric tons per
year ethylene plants as well as 4.3 million ton per year
p-xylene-based mega Crude-oil-Chemical plants in China (a
philosophy of "go big or go home".)
A more recent critical dimension of capital deployment impact is
the relative cost in a country to build an equivalent
technology/capacity (location factors). The IHS Markit
Process and Economics Program (PEP) team is seeing that leading
companies have, and will continue to take advantage of - local
costs, macroeconomics and country infrastructure within each of the
engineering, procurement and construction phases of a product
development to achieve a high capital deployment efficiency (i.e.
low cost per ton of installed capacity).
Examples of this realized advantage are illustrated below:
IHS Markit
Process and Economics Program (PEP) has packaged five essential
relevant reports/reviews as a part of our continuing technology and
economics PEP offering on Capital Deployment:
