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Petronas Chemicals to end vinyl business, take $184 mln charge
KUALA LUMPUR |
KUALA LUMPUR Oct 29 (Reuters) - The petrochemical arm of Malaysia's state oil firm Petronas plans to discontinue its vinyl business as it looks to streamline its assets and focus on higher value products.
Petronas Chemicals Group Berhad said in a statement on Monday it will stop operations at its two Malaysian plants from Jan 2013 and begin a sales process for its interest in a plant in Vietnam.
Petronas Chemicals will take a 560 million ringgit ($184 million) charge in the fourth quarter of this year after making provision for decommissioning the plants, site remediation expenses, contract termination dues and impairment charges.
"We made this hard call after due consideration of the inherent limitation within our vinyl business and its relative performance against other businesses within the group," Petronas Chemicals Chairman Wan Zulkiflee Wan Ariffin said in a statement.
"Our decision today allows us to focus our resources on higher value products and our growth projects in the pipeline," he added.
Petronas Chemicals said its vinyl business is not as closely integrated within its product value chain since it obtains its ethylene di-chloride raw material feedstock on the open market. Also vinyl plants are expensive to run and maintain.
The firm will now be able to divert ethylene committed to its Malaysian plants towards the production of higher-margin products, Petronas Chemicals said.
Shares in Petronas Chemicals ended nearly 0.5 percent lower before the announcement.
($1 = 3.0400 Malaysian ringgits) (Reporting by Niluksi Koswanage; Editing by Hans-Juergen Peters)
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