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Australia's Chemical Industry - Overview

This section provides an overview of Australia's chemical industry.

More detailed information also through the following...

Australian StatesHistorical developmentEconomics and performanceProductsCompanies

See also 

Introductory overview.Opinions, notably on role of government

Industry today

1. Organic chemicals

Overview Australia has two ageing petrochemical complexes - one at Altona in Victoria dominated by Qenos (formerly Kemcor Australia including the JV with Orica in polyethylene resins) and another at Botany, in New South Wales owned by Orica.

Orica's operations now only produces polyethylenes in competition with Qenos, and ethoxylates and polyols. Qenos also produces polypropylene and synthetic rubbers. 

The Altona complex

The Altona complex today has seen the progressive domination of Qenos (former Kemcor Australia) that includes the former Altona Petrochemical Company. The Altona complex uses less than its requirements of competitive Bass Strait gas. Though variously announcing plans to substantially increase polyethylene production, these have not come about.

Altona complex

Product Company Details

polyethylene resins Qenos LDPE

polypropylene resin Qenos former Hoechst Australia plant

synthetic rubber (SBR and BR) Qenos local butadiene.

propylene glycols Dow Chemicals imported propylene oxide

acrylic and styrene-butadiene dispersion latices.

BASF Australia imported acrylic esters

PVC resin Australian Vinyl Corporation

imported VCM. Joint company of Orica and Auseon.

The Botany complex

The Botany complex has consolidated its activities through by its JV owner Qenos (former Kemcor and Orica) in polyethylene resins (LDPE and LLDPE). The complex also produces ethylene oxide and its ethoxylate derivatives (surfactants, polyols, hydraulic fluids and triethanolamine), caustic soda and chlorine which is now owned by Huntsman Corporation.

In 1996 Orica began to use ethane by 1400 km pipeline from South Australia that now offsets its fundamental feedstock disadvantage having previously used LPG (shipped from Bass Strait) and naphtha (from the Kurnell Refinery). Its move to using ethane promoted Orica to close its polypropylene plant (though continuing to refine propylene from Kurnell which it sells to Basell at Clyde).  

Other major petrochemical operations

Huntsman Chemicals operates a styrene and styrene derivative plant at West Footscray, Victoria (near Altona) also producing some phenol and acetone. The key raw material, benzene, is 80 per cent imported.

Basell Australia operates two polypropylene plants at Shell refineries in Geelong

Victoria and Clyde New South Wales. It uses propylene produced as a by-product of Shell's refining operations plus some purchased from Orica (that refines propylene acquired from the Kurnell refinery since closing its polypropylene plant).

Incitec ammonia, urea and ammonium nitrate operations at Newcastle New South Wales and Brisbane Queensland.

Wesfarmers ammonia and ammonium nitrate at Kwinana Western Australia. Petrochemical capacity summary

Other organic chemicals

Note: Follow the links under the Product heading! Product Company Details

2,4-D, trifluralin, metham sodium

Nufarm at Laverton Victoria and Kwinana, Western Australia.

see carbon disulfide).

Acetone Huntman Chemicals at West Footscray, Victoria.

Acetone (cumene route) 12 000 tpa.

Acrylic-based flocculants and viscosity modifiers (resource development industry)

Nalco Australia, Allied Colloids at Wyong NSW andCiba Specialty Chemicals (formerly Imdex Chemicals) located in Kwinana, Western Australia.

Rohm and Haas at Point Henry Victoria produces acrylic polymer emulsions in water from imported acrylic esters.

SNF Australia with acrylic polymers.

See also acrylic acid.

Acrylic acid (acrylic esters and acrylamide) is imported.

Ammonia Incitec (72 per cent owned by Orica, the balance listed) plants at Newcastle, New South Wales and Brisbane, Queensland (plus ammonium nitrate and urea) and CSBP at Kwinana, Western Australia

Ammonia

Benzene as BTX BHP coking plants. Benzene production (20 000

tpa) for Huntsman Chemicals manufacture of styrene and phenol

Carbon black Hydrocarbon Products at Altona and Continental Carbon Petroleum at Kurnel in NSW

These purchase creosote tars to manufacture carbon black. Carbon black is sold as pigment and stabiliser for plastics and rubbers. Each supply about one-half the Australian market

Creosote Koppers Australia Creosote is produced as a component of oil refinery tars and from BHP coke ovens. Koppers Australia at Newcastle NSW purchases crude tar from BHP supplemented by imports (one-third?) of these tars. Koppers produces binder pitch, creosote oils, naphthalene, and crude tar acids.

Dimethyl ether CSR Distilleries Group, Pyrmont, NSW

About 3 000 tpa using methanol. Since 1988 as an aerosol propellant.

Ethanol (ethyl alcohol)

Manildra Group in Victoria and by CSR Distilleries in Qld.

Produced by fermentation. Australian market around 50 000 tonnes

Esters of fatty acids Megachem

Wide range of fatty acid esters from imported fatty acids.

Ethylene glycol and ethoxylates Huntsman. Botany NSW.

Ethylene oxide Huntsman Botany NSW.

Fatty acids (stearic and oleic acids)

Symex Holdings at Port Melbourne

Acid hydrolysis of animal and vegetable fats. 

Oleine. From tallow, palm oil and olive oil with total production of 15,000 tonnes (2000 representing 9 per cent of world production). Major applications are as additives for polymers (35%), textile auxiliaries

(25%), surfactants (20%) and lubricants.

Stearine. Total production is around 22 000 tpa (representing 1.3% of world production). Major applications are in rubber, plastic lubricants, candles and cosmetics).

Glycerol, co-produced with fatty acids, is also imported.

Aside from the use of vegetable oils, Symex uses 60,000-70,000 tonnes annually of tallow representing 95 per cent of fats used.

Symex also produces Distilled fatty acids from coconut oil, canol oil and tallow. 

Formaldehyde and formaldehyde-based adhesive resins

Four plants operated by Orica (Deer Park Victoria - iron oxide catalyst), Borden Australia 

Laverton North in Victoria - (silver catalyst process) and Murarne in Queensland) and 

Dyno in Western Australia.

These plants purchase methanol for conversion to formaldehyde and the urea is purchased from Incitec. (Formaldehyde is not traded being unstable). The two Victorian plants purchase the methanol on-line from the BHP plant.

Glycerol (glycerine)

Symex Holdings at Port Melbourne

By acid hydrolysis (splitting) of fats (tallow and imported palm oil). Principally producing fatty acid co-product, production is inadequate to supply Australia's needs.

Latex emulsions BASF at Altona Victoria. Dow Chemical at Altona

BASF purchased plant and market from Huntsman. Styrene purchased from Huntsman, butadiene from Kemcor.

Metham Sodium Nufarm Western Australia Soil fumigant

Methanol (methyl alcohol)

BHP Petroleum (with Orica Katalco of the UK) Wyndham 20 km west of Melbourne, Victoria

About 60 000 tpa methanol supplying about 70 per cent of Australia's needs.

Naphthalene BHP’s steel plants recovered (separation by distillation process) by Koppers Coal Tar Products operating at Newcastle NSW.

6 000 tonnes is purchased by Albright and Wilson at a new plant at Wetherill Park in New South Wales to produce a specialist surfactant (naphthalene sulfonate formaldehyde condensate) for use in mortar, cement and concrete.

Naphthalene sulfonate formaldehyde condensate

Albright and Wilson at Wetherill Park in NSW.

About 13 000 tpa (used as cement additive)

Phenol Huntsman Chemicals at West Footscray, Victoria.

Phenol (cumene route) 20 000 tpa

Polyethylene resins

Orica (LLDPE & LDPE) and Kemcor (LDPE)

LLDPE, LDPE, HDPE

Polyols, ethylene oxide oxide-based

Orica at Botany Australia Used to produce ethoxylates (non ionic surfactants (inc. nonyl phenol)

Polyols, propylene oxide-based Dow Chemicals From imported propylene

oxide

Polypropylene resin

Shell Refineries at Geelong, Victoria and Clyde, New South Wales. Kemcor at Altona Victoria

Polypropylene

Polystyrene and other styrene polymers

Huntsman Chemical Corporation at West Footscray and Dow Chemicals at Altona, Victoria under JV of Polystyrene Australia.

The company has a joint venture with Dow Chemical for marketing and distribution of general-purpose and high-impact PS in Australia and New Zealand. 80 per cent from imported benzene. Some 60 per cent of the 80 000 tonne polystyrene market is produced by the Polystyrene Australia.

Polyvinyl chloride Australian Vinyls Corporatio with a 90 000 tpa plant at Altona and Orica with a 140 000 tpa plant at Laverton Victoria).

From imported vinyl chloride monomer (200 000 tonnes

Specialist chemicals and preparations

Dow Chemicals and BASF for textiles, leather and paper

Styrene rubbers Qenos at Altona, Victoria SBR and BR. Latex emulsions are prepared by BASF and Dow Chemical.

Vanadium pentoxide

Australian Vanadium, NW WA

Xanthate chemicals Coogee Chemicals 5 000 tonnes capacity. See

also carbon disulfide

Inorganic chemicals Inorganic chemical manufacture in Australia is represented in particular by sodium carbonate, superphosphate fertiliser, titanium dioxide pigment, sodium polyphosphate and sodium cyanide.

Note: Follow the links under the Product heading!

Product Company Details

Alumina (Alcoa of Australia and Worsley Alumina in Western Australia, Queensland Alumina and Nabalco in Queensland) and hydrated alumina by Alcoa in WA.

Alumina

Aluminium fluoride Proposed by Alichem, Kwinana Western Australia

Aluminium fluoride proposed 40 000 tpa.

Ammonium chloride

Coogee Chemicals produces 8 000 tpa in a 25 per cent solution form.

Ammonium chloride

Ammonium phosphate

Queensland phosphates MAP, DAP fertiliser

Caustic soda and chlorine

Around eight 5 000 to 20 000 tpa chloralkali units operate around Australia to produce chlorine including two dedicated to

More information Caustic soda and chlorine. See also our reports on caustic soda and chlorine

the two titanium dioxide plants in Western Australia.

Gallium chloride Rhodia Pinjara Western Australia

Gallium chloride (currently closed)

Industrial gases BOC, Air Liquide, Linde Industrial gases

Lime (calcium oxide) Various Lime (calcium oxide)

Lime sulfur (calcium polysulfide)

Balhan Industrial, at Moolcap Victoria.

Used as agricultural fungicide, metal plating waste recovery and mineral flotation aid.

Lithium carbonate Gwalia Consolidated. Currently mothballed

Magnesium oxide Causmag at Young NSW QMAG at Rockhampton

Manganese dioxide/sulfate

Sovereign Resources Has manganese ore deposit in Nullagine region of WA. Can mine 20 000 tpa. Proposed leaching with sulfuric acid to sulfate (fertiliser grade) and possible plant at Port Hedland to produce electrolytic grade dioxide.

Manganese dioxide (Electrolytic)

Delta Electrical Industries of South Africa at Newcastle, NSW

About 23 000 tpa suppying about 10 per cent of world production (used in dry-cell batteries - value US$1800 per tonne). Sold by BHP for A$57m

Mercurial fungicides (alkoxy mercury compounds)

Alpha Chemicals at Dee Why, NSW.

Used on sugar cane crops.

Nickel Production in Western Australia Nickel section

Peroxides Solvay Interox in Banksmeadow, New South Wales

Products include hydrogen peroxide, peracetic acid and sodium perborate (tetra and monohydrate).

Phosphates Albright and Wilson (Australia)

Western Mining

A&W: Inorganic phosphates (food and industrial grades) WMC: Ammonium phosphate fertiliser.

Corporation (WMC)

Silicates, aluminates, sulfates

PQ Australia in NSW, Coogee Chemicals (in WA Hardman Australia in NSW.

Coogee Chemicals produces a sodium silicate at Kwinana Western Australia (dissolving silica in sodium hydroxide) for use by the Millennium Inorganic Chemicals titanium dioxide pigment plant

Silicon metal Simcoa at Kemerton). Silicon metal for metal alloys

Sodium carbonate (soda ash)

Penrice Soda Products at Osborne, South Australia

Sodium carbonate (soda ash) by solvay process producing around 400 000 tpa.

Sodium cyanide Orica and Ticor in Queensland and Australian Gold Reagents in Western Australia

Sodium cyanide - production capacities of about 30 000 tonnes each,

Sulfuric acid at metal smelters

Superphosphate fertiliser

manufactured in all states Superphosphate fertiliser from imported phosphate rock and sulfuric acid,

Titanium dioxide pigment

MIC Chemicals at Australind and Tiwest at Kwinana (each producing about 80 000 tonnes).

Titanium dioxide pigment

Zirconia, Zirconium hydroxide and sulfate

Hanwha Advanced Ceramics at Kwinana

 

Company Location Feedstock ProductsCapacity (nameplate tpa)

Australian Vinyls Corporation

Altona, Victoria

vinyl chloride monomer (imported)

polyvinyl chloride resin

PVC resin 220,000(Orica 140 000 and Auseon 80,000)

BHP Wyndham, Victoria

natural gas methanol methanol 60 000

Dow Chemical Altona Victoria propylene polystyrene, 62,000

oxide (imported), butadiene. Styrene (Huntsman)

polyols, SB latex, epoxy and vinyl ester resins

propylene oxide applied to polyols. 20,000 polystyrene (JV with Huntsman)

Huntsman Corporation

Botany ethylene (ethylene oxide)

Ethoxylate surfactants, glycols, ethanolamines

35,000 ethylene oxide that is converted to the derivatives

Huntsman Chemical Co

West Footscray (near Altona) Victoria

benzene (80% imported), ethane, propylene

styrene (exports) polystyrene, phenol, acetone, phenolic resins, unsaturated polyster resin polymers

styrene 100,000 polystyrene 45,000 phenol 20,000 acetone 12,000 variable

Orica Botany, New South Wales

ethane ethylene LDpolyethylene, LLDpolyethylene,

ethylene 260,000 LDPE 90,000 LLLDPE120 000

Kemcor Australia

Altona, Vic gas oil & ethane ethylene butadiene

ethylene propylene butadiene LLD polyethylene HD polyethylene SBR rubber BR rubber

ethylene 220,000 propylene 60,000 (LDPE 30,000 closed Nov 2000) HDPE 100,000 & 90,000 polypropylene 45,000 (SBR 20,000 closed 2000.)

BR 10,000 

Basell Australia

Clyde, NSW & Geelong, Victoria

refinery gas polypropylene resins

Geelong 120,000& Clyde 70,000

Key petrochemicals - by company

Petrochemical Company Production

Ammonia Incitec two 250 000 plants (Newcastle and Brisbane)

Wesfarmers (WA) 240 000

Ethylene Kemcor 220 000

Orica 260 000

Huntsman 30 000

Propylene Basell (Shell Oil) 200 000

Kemcor 60 000

Australian refineries 70 000

LDPE Orica 90 000

LLDPE Orica 120 000

HDPE Kemcor 100 000 & 80 000

Polypropylene Basell 120 000 (Geelong) & 70 000 (Clyde)

Kemcor 45 000

Polystyrene Polystyrene Australia 60 000 (40,000 &20,000)

Rubber  (BR) Qenos now Kemcor 10 000 tonnes butadiene rubber

VCM Australian Vinyls 120 000 and 80 000 (est.)

Styrene Huntsman 100 000Ethylene applications in Australia.

LDPE 130 000

LLDPE 110 000

HDPE 170 000

Ethylene Oxide 35 000

Styrene 30 000

Total 430 000

Outlook.With abundant oil and gas reserves, coal and minerals in an increasingly competitive country, Australia has outstanding potential to manufacture a broad range of chemicals. World class capital-intensive titanium dioxide pigment and alumina manufacturers, sometimes even using inferior raw materials, are successfully selling into a highly competitive world market.

The rationalisation is anticipated to slow with offsetting growth in new projects, notably in Western Australia. Orica's Botany plant increasingly moving to ethane-derived petrochemicals with access to South Australian ethane.

There are many opportunities (see also Western Australia). Australia is the worlds largest importer of caustic soda (used for alumina production). Yet though simply manufactured from common salt and energy, Australia still imports nine-tenths of its needs. In Western Australia salt and energy are produced along side each other for export as raw materials and energy (at the Burrup Peninsula in the north west). An inadequate market for co-produced chlorine is claimed as an obstacle for a world scale chloralkali plant with Australia becoming increasingly competitive, this may change.

Presently seven-eighths of Australia's production of titanium minerals are processed overseas. The evidence with expanding production suggest vast export potential.

Opportunities

The chemical industry has improving opportunity to expand based on Australia's resource endowments and the nearby fast growing Asian markets. There are many favourable influences as for example the deregulation of the gas industry in Western Australia with prices falling by one-half. In response, BHP has made a US$1bn investment for production of direct reduced iron). Lower raw material and operating costs will favour world-class energy-intensive activities that may include a petrochemical project and the production of magnesium metal.

The opportunities for manufacture will be described in updates to this section. This will include caustic soda. During 1995, Australia imported 1.1 million tonnes of caustic soda valued at A$385 million. Not only indicating potential, it also points to the awkwardness of the industry. Australia is a major exporter of energy by way of natural gas (and coal) and salt, in addition to caustic soda, it also imports some A$100 million of vinyl chloride monomer containing some 100 000 tonnes of chlorine. There are many opportunities.

Comments and suggestions welcomed. info@

Chemlink Pty Ltd ABN 71 007 034 022. Publications 1997. All contents Copyright © 1997. All rights reserved. Information in this document is subject to change without

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Chemical Industry Performance

This section describes the performance of Australia's chemical industry based on some indicators. For another quick overview.

See also other sections for...  

History and development

Industry activities

Companies

Activity by Australian state

WA's chemical industry performance.

What Australia imports and exports by State Example of exports for 1999 by State.

Contact us for list of detailed chemical imports (like imports) by State.

ALSO..

What are Australia's top ten exports in chemicals for 1999

What are Australia's top ten imports in chemicals for 1999.

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Key points detailed below include....Press to read more Quick summary

Trend Upturn, after decline in significance (since 1975)

Profits Above Australia's commercial average

Investment New investments offsetting industry rationalisation

Employment Employment down to 44 000 from 75 000 in mid 1970s

Performers Industrial gas, inorganic chemicals, pharmaceuticals and pesticide chemicals

Productive sectors Industrial gases, explosives and pharmaceuticals

Relative productivity Labour productivity outperforms Australia's manufacturing sector

Trade performanceExport performance has increased - from one-sixth of imports to one-third but now declining?

Performance significance

Less than 2 per cent of companies export more than 50 per cent of their sales

Background - restructuring and new investmentThe chemical industry, like other Australian manufacturing sectors, has been reducing labour enabled by rationalisation of production centres, process automation and other efficiency improving measures.

For example, in the first part of the 1990s, employment at major production centres has typically reduced by one-third. Some centres closed like ICI Rhodes and many specialty chemical plants. The changes have been driven by the reversal of protectionist measures that taxed, and up to 1960, even restricted imports competing in the marketplace with chemicals (and other manufactured goods) produced in Australia. With Australian prices determined by import competition, these measures then allowed local manufacturers to raise prices well above open market levels enabling many high-cost, uncompetitive activities. (Indeed prices at 40 to 60 per cent above open market levels were once common.)

This section provides performance indicators including turnover trends, profitability, efficiency and trade performance. Resources and time permitting, we can show the key characteristics that illustrate the strengths and weaknesses providing strategic opportunities and government policies for the development of Australia's chemical industry.

We hope this stimulates some long overdue self-examination and help priorities and roles for Government. Comments always welcomed.

Significance - fallen (but bottomed!)From the mid 1970's the chemical industry's significance (red line) has fallen by one-half (coinciding with declining import tariffs) to around 1.3 per cent of the economy. (Australian Bureau of Statistics information of industry sector value added as percentage of GDP). This has occurred even though its turnover (bars, log scale) has continued to increase since 1905.

 

While the industry's significance to Australia has halved, when compared to other industrialised countries, it is today broadly comparable in importance at between 1 and 2 per cent of gross domestic product. That said, it is hugely below it potential as signalled by its resource base.

One conclusion is that its value added (profitability and activities) had been overextended by trade restrictions. With new investments, there is today every indication the two decade downturn has bottomed out. We believe with Australia's resource base, it has outstanding potential!

Of course relevant to this section and elsewhere, these are macro perspectives. Major shifts in relative significance between commodity and specialty chemical producers, and between synthesis manufacturers and formulators have also occurred.

Comment

From 1965, Australia's largest oil and gas reserves in Bass Strait, on the door step of the Altona petrochemical complex, enabled Australia to become almost self sufficient in oil and gas. We contend, it provided little more than cheap gasoline and super normal profits for some (like 106 per cent return on shareholders funds in one year). No project can be attributed to it despite very high import tariffs and over-used anti-dumping legislation. The North West Shelf reserves in Western Australia are being exploited but will they repeat Bass Strait in failing to add value? (See also 1996 Chem Systems presentation).

 

Profits - recovered (a little)

Press to see full size

Since 1974 tariffs have been reducing to a maximum of 5 per cent leading to big declines in profits and employment. The profitability of the synthesis sector of the chemical industry since 1976 is shown in the above graph. (The chemical sector of the Plastics and Chemical Industries Association [PACIA], derived by ACTED from their publications "Facts and Figures" to 1996 and their Performance Surveys to 1998. Their survey is based on around 32 chemical manufacturers (though only two-thirds are significant manufacturers). Margins during 1998 had increased while capacity utilisation had fallen from 93 to 86 per cent.

To be updated: 

It shows that for the last five years including 1998, that sector of the chemical industry averaged a 10.0 per cent return on shareholders funds. Over the five years including 1996, Australia's largest firms (those with public disclosure) achieved only a 5.1 per cent weighted return. Orica, as the country's largest chemical firm, achieved 11.9 per cent over 5 years and Millennium Inorganic Chemicals (formerly SCM Chemicals) 25 per cent also over the same period. (Source IBIS Business Information "Secrets of Spectacular Success", Business Review Weekly Feb 17, 1997).

Given the reductions in tariffs which slashed potential gross operating margins, the status of the industry today is little short of remarkable. It should be contrasted against the predictions made by industry spokespersons about the consequences of reduced protection.

Much of the resilience can be attribute to reducing the labour intensity, especially of the larger operations. Management practices helped. Byvest purchased Penrice Soda Products, that had been operated for fifty years under a single owner, and its

shareholders were returned 42 per cent per year over six years until sold in 1996 (to A G Harris). Also the performance of Symex Holdings.

More generally, though only for the year 1995, the industry represented by ANZSIC 25 (Petroleum, coal, chemical and associated product manufacturing) achieved an 8.1 per cent operating profit before tax on sales turnover which is the same as all manufacturing sectors. (ABS Cat 8221.0 Table 3).

It is worth noting that the formulators of chemicals (i.e.. the larger balance of the chemical industry not involved in synthesis) have experienced a smaller decline in employment.

The following table shows some data published by Business Review Weekly October 1997 (showing data prepared by IBIS Business Information Services using latest available data ranked by sales). A 1998 update is shown where available.

Company Revenue (A$ millions) 1997

19988 update

1999 Net profits after tax % shareholders funds

1998 update

1999 update

1 year SROR* %pa (to 1999)

5 year SROR* %pa (to 1999)

10 year SROR* %pa (to 1999)

Orica (ICI Aust)

3508 2722 3960 13 15 11.7 -8.8 1.5 9.7

Incitec 955 905? 1028 23 23 7.6 13.9 11.4 19.4

BOC Gases 781 782 28 25.6

Wattyl 547 7.0

Kemcor Olefins

326 5

Koppers 296 64.8

Dow Chemical 275 269 11 -163

Millennium Inorganic Chemicals

239198 (est)

17

BASF 236 239 0.1 8.7

Basell 214 239 9 3.3

Huntsman Chemicals

247 14

Australian Chemical

188 7

APS Chemicals

158 117 219 12 5 7.8 -15 11.1 -

Penrice 158 26.5

Note:*=SROR is the annualised return to shareholders from maintaining their investment by returning all returns such as dividends,

participating in rights issues and selling stock as required so as not to contribute to any new capital. 

This table is reproduced below for the commodity chemical producers in the above table (ranked from largest on left).

Press to see full size

Ownership It is relevant to note that Australia's chemical synthesis industry is overwhelmingly owned by multinational companies. From the late 1930s, multinationals either purchased or invested in Australian activities using trade barriers to exploit the profitable domestic market. Strong links with government, especially at the federal level was important to ensure the maintenance of protection to offset lack of international competitiveness (and sometimes operational inefficiencies). With a decline in protectionism, multinationals have been investing based on Australia's competitiveness and their global strategies.

Between 1991 and 1996, the share of foreign companies in the Top 1000 (IBIS Business Information) revenue doubled from 13 per cent to 24 per cent (to return the levels of 1980) - a shift not reflected in multinational investment in Australia's manufacturing sector. In the chemical industry it is estimated that foreign ownership exceeds 70 per cent - higher for some sectors such as soaps and detergents at 90 per cent.

In PACIA's Performance Survey '98, table 4.2.7 shows that only 20 per cent of companies in their survey, are independent of "overseas initiatives"! (70 per cent have more than 50 per cent dependence).

Para 4.2.5 could be indicative as well. This section identifies extent of remuneration for use of intellectual property or provision of technical or management assistance of services. Some 60 per cent of surveyed companies pay OR receive remuneration (no distinction on direction). We estimate that by value, 85to 95 per cent of income is paid out to overseas principals.  

InvestmentIt is worth noting that WMC has invested some A$700 million in an ammonium phosphate plant in Queensland and Dyno and/or Wesfarmers in an ammonia/ammonium nitrate plants in Queensland and Western Australia. There are

feasibility studies for large world-scale ammonia/urea plants in Western Australia and Victoria. 

Recent announcements on new investment.

Chem Systems report to CIP.

Turnover profileFor more industry description

Click on the graph to see as a pie graph

The chemical industry represents about 8 per cent of manufacturing activity (5 per cent by employment) having declined to about 1.3 per cent of the Australian economy (by GDP). At this level it is typical of other industrialised nations (though below it potential given Australia's resource base).

Manufacturing turnover in 1997-98 was A$17 billion so that the Australian market for chemicals is around $25 billion of which three quarters is locally manufactured (see trade profile).

Equally interesting is the change in its profile in the fifteen year period since 1982. The commodity chemical sector has declined substantially largely due to reductions in import tariffs.

Click on graph to see full size.

EmploymentIn 1997-98 the chemical industries employed 45 200 down 38 per cent from 70 000 in the mid 1970s reflecting substantial rationalisation and change.

Basic chemical synthesis activities employed 13 000 down 25 per cent from 20 000 in 1971-72 and chemical formulating 32 000 down 25 per cent from 40 000 in 1971-72.

The following graph provides an indication of growth for each sector in the period 1996-97 compared with 1994/95. 

Press to see full size

StructureAs in most countries, the industry is broadly divided into manufacturers that mix chemicals and those that manufacture by a process of chemical synthesis. The Australian chemical industry in 1997-98 had a turnover of A$18 billion.

By turnover, two-thirds of Australia's chemical industry is represented by manufacturers that combine chemicals to achieve desired characteristics. Included are manufacturers of paints, adhesives, detergents and pesticides. Their competitiveness is derived by manufacturing close to markets using locally available solvents and diluents often helped by close customer relations.

The other third of the chemical industry manufactures by chemical synthesis - a process that changes the chemical identity. This industry is dominated by petrochemicals such as synthetic resins and rubbers. A broad range of petrochemicals are produced depending on available feedstocks, markets and investment timing.

 

The scope of the chemical industry is defined by the Australian Bureau of Statistics to include the petroleum industry. It excludes the manufacture of aluminium oxide (ie. alumina) but includes titanium dioxide pigment. Metals too are excluded though produced by chemical means - some like titanium, tungsten, nickel and tantalum by

sophisticated means. The boundaries of the chemical industry are arbitrary broadly starting with raw materials such as salt, limestone, sulfur, fossil fuels (such coal, gas and petroleum), minerals (such as phosphates) and ending with end products arbitrarily defined. The chemical industry is generally its own major customer.

The statistics about the chemical industry can be misleading not only because they bring together those that manufacture by chemical reaction (synthesise) with those that mix to customer requirements (eg. detergents, adhesives, sealants, paints etc) but also of heavy industry with light and more valuable products.

The heavy chemical industry includes the manufacturers of plastic resins (eg. polythene plastic resin, sulfuric acid) where the scale of operation is large with few employees evident.

The light chemical industry tends to use more people and produces more valuable products at smaller scales. Australia has both type of industries.

Though a major manufacturer of raw materials, Australia manufactures less than one-half of its needs of chemicals. Again though often exporting most of its potential raw materials, exports of chemicals are generally less than one-tenth of its production, generally discounted to be competitive in the world market. Compared to overseas countries, Australia's chemical industry has underperformed. As shown later, this has largely been an outcome of past protectionist policies that encouraged the manufacturing industry to be oriented to the home market - fragmenting production units in favour of large scale, cost effective, manufacture so necessary to enter world markets.

For Chemical Industry association structure

PerformanceRelative growth (1992-1998)

Internal comparative performance

Over the same period between 1996/97 compared with 1994/95, there has been a marked variation of employment and labour-intensity in the chemical sectors.

The following graph shows shows the variation in turnover compared with variation in employment. The chemical industry's weighted average was set at 1.00 with adjustment for other sectors.

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In the following graph the turnover growth and productivities have been combined for the period 1982 compared with 1994.

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Note that these figures were estimated on turnover. During the course of the 12 year period used in the above evaluations, import tariffs reduced by around 30 per cent for the commodity chemicals, deflating their prices compared with the formulated chemicals. Though formulated chemicals also incurred tariff reductions, the potential price benefit of tariff assistance was often underutilised with local, rather than foreign, competition determining market prices. Accordingly, the previous two graphs may tend to understate growth for commodity chemicals (and overstate it for formulated chemicals). A quantity (mass) or corrected valued added analysis would provide a clearer estimate. A large contributor to this performance profile is of course industry rationalisation that in recent years has promoted greater change than indicated in this 12 year profile.

The pattern confirms that consolidation of production centres has provided greater growth than efficiency improvement at individual centres through automation and other measures to reduce the labour intensity.

Outperforms manufacturing sector

The chemical industry has outperformed other sectors of Australia's manufacturing industry. The industry represented by ANZSIC 25 (Petroleum, coal, chemical and associated products) from 1989-90 to 1994-95 increased its gross product (turnover) per employee by 21 per cent compared with Australia's manufacturing average of 19 per cent. (ABS Cat 8221.0 Table 4).

It is worth noting that in 1960, Australia's labour productivity in manufacturing value added per hour was 51 per cent of the US, 91 per cent of West Germany but 270 per cent compared with Japan. In 1995 it had remained about same as US, at 52 per cent of the US, fallen by one-third compared to Germany at 64 per cent and fallen behind Japan to just one-quarter the 1960 value at 71 per cent. (Source OECD, The Economist). Given the generally small scale of chemical manufacturing in Australia, the productivity in the chemical industry can be anticipated to be comparable, and with a trend comparable to all manufacturing.

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December 2001 update

Australia has been ranked the 12th most expensive country in which to do business, according to the Economist Intelligence Unit which assessed business operating costs in 31 key countries around the world, giving Japan a rating of 100 because of high labour, rents and expatriate costs while Australia rated just 38.3. The United States is in second place on 66.3, just ahead of Germany (66.0) - both of which have high labour costs. The United Kingdom is fourth on 64.0, largely because of high transport costs and office rents.

Apart from Japan, Australia is slightly more expensive than many Asian regions because of its high labour costs with Hong Kong (14th place with a rating of 27.3), South Korea (15th with 27.1), Taiwan (16th with 26.6) and Singapore in 17th place with 22.4 all offering better value for companies seeking to set up business. The report said Singapore benefited from some of the lowest costs in terms of taxes, corruption, telecoms and transport. China is in 28th place with 7.7 points, Thailand is 29th on 7.3 while Indonesia is 30th at 1.7. Hungary is the cheapest country of the 31 surveyed and was given a rating of 1.0. 

The rankings are published in a new report, Worldwide Business Cost Comparisons, which analyses the costs of doing business around the world, focussing on the countries which attract the most direct investment or have the potential to do so. The report examined statistics relating to eight categories: labour costs; business travel; costs for expatriate staff; corporation taxes; perceived corruption levels; office and industrial rents; telecommunications; and transport costs. The costliest country was given a score of 100 and the cheapest a score of 1 with the variables then weighted and combined to produce an overall score. Apart from Japan, the US and Canada in ninth place, European countries made up the rest of the top 11 with Spain the cheapest in western Europe with a score of 39.5.

 

Trade performance - national

Example of exports for 1999 by State. Contact us for list of detailed chemical imports (like exports) by State.

ALSO..

What are Australia's top ten chemical exports for 1999

Product $ % total

Medicaments (excl.antibiotics,hormones,steroids, alkaloids, derivatives thereof), in doses or for retail sale 902081713

Pigments and preparations based on titanium dioxide 388380079

Alkaloids of opium and their derivatives; salts thereof 119398348

Medicaments cntg hormones, (excl. insulin, adrenal), steroids used as hormones, in doses or for retail sale 116861459

Wheat gluten 89266443

Casein 77400518

Aluminium hydroxide 72714457

Blood fractions (incl. antisera); vaccines 63877491

Preparations for use on the hair 59870397

Silicon 56728246

What are Australia's top ten chemical imports for 1999.

Product A$ % Total

Medicaments (excl.antibiotics,hormones,steroids, alkaloids, derivatives thereof), in doses or for retail sale 2048779246

Heterocyclic compounds, with nitrogen hetero-atom(s) only, nes 248781392

Beauty or make-up preps for skin (excl. medicaments, incl. sunscreen/suntan preps); manicure/pedicure preps 246456448

Sodium hydroxide in aqueous solution (soda lye or liquid soda) 230501381

Diammonium hydrogenorthophosphate (diammonium phosphate) 218995605

Chemical products and preparations, nes 186360635

Medicaments (excl. hormones, steroids, antibiotics, alkaloids), not put in doses or in packs for retail sale 185800936

Urea 167858290

Blood fractions (incl. antisera); vaccines 157515223

Heterocyclic comps with nitrogen hetero-atom(s) only, cntg pyrimidine, piperazine, triazine ring; nucleic acids 154813754

A summary of trade is summarised in the following graph for the nine principal sectors of the chemical industry (SITC groupings).

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Generally imports exceed exports by a factor of three with the exception of colouring matter which is represented by rapidly growing exports of titanium dioxide pigment.

Over a long time frame, industry restructuring is promoting the growth of exports at a faster rate than imports. Imports now exceed exports by three having only recently been six-times greater than the value of exports. Since 1994, imports have grown faster than imports.

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Export growth (Is this the most important graph on this page?)

Trade figures by industry sector are shown in the following graph showing the ratio of the value of exports to the value of imports by industry sector from 1989 to 1999 for all Australia.

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This important graph shows that since 1989...

1. Exports have increased about 50 per cent faster than imports. Exports have increased from one-fifth to one-third the value of imports of all chemicals in that eight year period.

2. Some of the faster growing sectors are inorganic chemicals and plastics in non primary forms (ie. worked plastics) with exports doubling compared with imports.

3. The colourants sector (largely titanium dioxide pigment) has achieved a trade balance with exports approximately equal to imports (though underperforming compared with potential).

4. The petrochemical sector for plastics in primary forms has increased by 50 per cent though still importing three-times more than it exports. It is worthwhile to note that the primary form (pre moulding and extrusion) is performing better than plastics in non-primary forms (eg. sheets, tubes etc).

By product - petrochemicals

By petrochemical exports can be summarised in the following table. Only polypropylene is exported with imports assuming a substantial share of the the market ranging to 100 per cent! (Data 1997).

Petrochemical Market size (tonnes) Net trade as % market

Ethylene 430 000 0

Propylene 320 000 0

LDPE 140 000 9% Import

LLDPE 85 000 7% Import

HDPE 200 000 23% Import

PP 185 000 57% Export

VCM 180 000 100% Import

PVC 195 000 12% Import

Trade performance - by Australian stateThere are also substantial variations between Australian states based on the performance of their industry - collectively for all their chemical sectors and by each chemical sector (SITC). The first point to note that three-quarters of the trade deficit in chemicals for Australia is represent by just two States - New South Wales and Victoria.

 It should be noted that these two States also have had the earliest and largest chemical industries in Australia. Of course being also the largest, the allocation could be justified but if recalculated on a per capita basis, the significance relationship barely changes.

It is worth commenting that in a decade the ratio of the value of Australia's exports compared with imports, has improved from just one-fifth to one-third the value of imports! A balance of trade in chemicals is still some time away (unless aluminium oxide is included).

By Australian State

A state by state comparison (five digit resolution available on request) .

Western Australia

South Australia

New South Wales

Queensland

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The contributors to Australia's trade imbalance in chemicals is clearly shown, the largest imbalance is NSW, WA the best.

Notes

Of course relevant to this section and elsewhere, these are macro perspectives. Major shifts in relative significance between commodity and specialty chemicals, and between synthesised products and formulated products have also occurred.

Pharmaceuticals are growing but largely influenced by the export incentives offsetting in part the monopsonist status of Australia's Pharmaceutical Benefits Scheme. With some minor exceptions, Australia's pharmaceutical industry does not synthesise the active ingredients. (Note: the Government announced April 1997, that it was extending the scheme (that has cost A$1bn over past 8 years) though reducing the rebate from 25 per cent to 20 per cent. See also commentary.)

It is worth noting that by turnover, 40 per cent of establishments do not export, and only 2 per cent export more than 50 per cent of sales. (ABS Cat 8221, Table 10).

The following graph shows the value of exports of chemicals as a percentage of the value of imports this time by Australian state.

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The above chart shows that....

1. Again with the national average shown by the red line, (exports are one-third the value of imports) Western Australia has the highest ratio with exports nearly equal to imports. However, and in contrast with the other Australian states, Western Australia's exports have failed to keep up with the growth of imports, declining from a peak of 100 per cent in 1992 to 80 per cent of imports in 1996.

2. The best performing state is Queensland whose exports have nearly trebled compared with imports in the last eight years. Imports are still exceeded by exports by a factor of two.

3. The states of New South Wales and Victoria, while improving are underperforming. For New South Wales the value of imports still exceed exports by a factor of more than four - the status of Australia around 1989.

 

Research and DevelopmentUNDER DEVELOPMENT

Broadly, Australia is the 14th largest economy (ranked by GDP) but 21st in science and technology. Almost 45 per cent of business R&D is undertaken by affiliates of international companies - much on the development and adaptation of products to suit the Australian market.

In PACIA's 1998 Performance Survey; R&D outlays are expressed by size of business (large, medium and small that are defined by range) that increases with size of business. 

 

Small 0.7 per cent

Medium  0.8 per cent

Large 1.1 per cent

In the following graph, R&D by PACIA members (Red for Australia)  is compared with R&D outlays of international companies (prepared by SalomonSmithBarney in Gyrus 1999).

Surprisingly, over 80 per cent of participants of their survey indicated that the reduced reduction of the R&D tax concession (from 150 to 125 percent), would have NO impact on planned expenditure.

Comments and suggestions welcomed.

The reader should note the disclaimer

Overview of Chemicals Australia

You may also care also to view the following.

The ACTED paper presented at the First Australian Chemicals Summit (August 1998 and update).

Industry performance (more industry information including of trade)

Opinions (a collage of feedback to our site. The Industry section perhaps the more relevant. 

Why is Australia failing to attract investment (just two export-oriented firms in last decade).

Example of exports for 1999 by State. ( Contact us for imports by State.)

What are Australia's top ten exports for 1999

What are Australia's top ten imports for 1999.

What and who? There are some 400 files and 4000 linkages in the Chemlink, Chemicals Australia website. Chemlink is a consultancy company specialising in chemicals and energy in a network of

specialists. More information is provided on our corporate profile.

Topics covered in this website include companies, products, markets, history (some strategically fascinating, like the now closed CSR Chemicals), industry performance, the regulatory framework, contacts, policies and many more to help you understand the development and status of Australia's chemical industry.

The information is mostly free and we do our best to find the time to keep it current and accurate. 

Below are some observations about the commodity side of the chemical industry.

Industry

Rise and fall and.....?

By turnover, Australia’s chemical industry represents about 8 per cent  (4.7 per cent by employment) of Australia’s manufacturing sector. This sector employs some 45 000 people with a turnover of A$18 billion. It's significance to the economy has fallen to represent just 1.3 per cent of GDP. 

Compare this to a country like the Netherlands where chemical exports (that make up 18% of the country's exports) account for 8% of Dutch GDP and 80% of chemical production is exported compared with around 10 per cent in Australia. The Netherlands does not have our raw material base.

It is a diverse industry ranging from large-scale petrochemical complexes, that manufacture polymer chemicals by a process of synthesis, to small business that manufacture by simply mixing chemicals to produce pesticides, paints and nearly all pharmaceuticals. Raw materials too are variable, ranging from locally available hydrocarbons and minerals, to sophisticated chemicals. The common link is that they use and produce chemicals .

It is an industry that has changed in size and composition. Since the mid-1970s, employment, the number of manufacturers, the industry’s contribution to GDP and the number of synthesised chemicals has reduced by between one-third and one-half. While undergoing this contraction, the demand for chemicals in the home market has continued to grow by around 3 to 4 per cent per year with even faster growth in the nearby Asia/Pacific region. In this apparent contradiction of contraction in the face of growth in demand, Australia has adequate petroleum, coal and mineral

resource endowments, some of which are exported to become raw material inputs for overseas chemical industries.

In the last few decades, Australia’s share of investment in the Asia/Pacific region has continued to decline suggesting the local availability of natural resources and low sovereign risk is not sufficient to attract adequate investment. Note for example the on-going failure to attract investment in WA despite extensive (and in our opinion) misguided endeavours by the state's government. A petrochemical project in the north-west of Western Australia, the fifth chloralkali venture under review in Australia, has not progressed beyond a preliminary feasibility study. State and federal government agencies continue to promote over-the-horizon projects.

It is relevant to note that since the mid-1970s import tariffs, that ranged to 60 per cent, have been phased down to a maximum of 5 per cent in 1992. Industry through the 90's  predicted a “collapse” in the face of government intentions to reduce protectionism, implying these more recent changes in the industry have been promoted by a reversal of the government’s protectionist policies. More recent endeavours by older sectors of industry is aimed at dumping protection. The industry continues to signal insecurity about its future. 

Its potential

There is potential for growth. Australia today has a foreign trade deficit in chemicals of A$7 billion per year as it imports three-times more by value than it exports. This suggests potential for growth for the domestic chemical industry if it can establish a competitive advantage in the market. As an example, Australia is the world’s largest importer of caustic soda derived from salt, petroleum gas and energy that are significant exports from Australia. Other raw materials are sometimes only partially processed in Australia to the end product chemical, such as ilmenite and rutile, while other chemicals in which Australia should have a comparative advantage based on traditional factor cost considerations, such as energy-intensive urea, are often largely imported.

The World Bank has assessed per capita wealth for some countries. While Australia has the highest natural resource wealth per capita in the world (1995), its personal wealth is one of the lowest. It points to the enormous potential if the country can begin to add value to its natural endowment and not just support removalist industries (mining).

Press on image to see full scale.

Remember, adding value to resources, involves and produces "chemicals".

To Australia’s north are very successful chemical industries operating in countries without relevant natural resources. The changing industry profile, growing markets, and adequate raw materials, suggests Australia’s chemical industry can continue to evolve and grow with a substantial contribution to Australia’s GDP and trade balance.

Broadly therefore, investment in Australia's commodity chemical (ie. bulk chemicals such as plastic resins, caustic soda and soda ash) industry has moved from high-cost, often small-scale activities with limited international competitive advantage, to those which have some edge. That edge might come from access to competitive raw materials such as the titanium pigment producers using ilmenite and using nearby phosphate mineral and natural gas as WMC's new phosphate fertiliser project in Queensland, Precious Metals of Australia's vanadium pentoxide project or freight savings as producers of sodium cyanide for the gold industry and ammonium nitrate for use as explosive. Much of this transition has been occurring in the past decade, and with the exception of WMC's ammonium phosphate project, largely oriented to the home market. New more outward-oriented projects are under review. Notable is Plenty River's proposed ammonia and urea fertiliser project and the Dow/Shell venture in chloralkali chemicals for the Burrup Peninsula in the NW of Western Australia. That change to large-scale projects is not assured as distance to markets, high construction costs and lack of supporting infrastructure weighs against some of the advantages provided by access to competitive natural gas or minerals.

The following was said at the last Summit.

With largely depreciated assets, these facilities can continue operation until a decision for significant investment is required. At that point the overwhelming economic reality of import from world-scale manufacturing operations may likely cause closure of the local operation.

Mr Noel Williams, Business Development Manager, Asia Pacific. Dow Chemical

(Australia) Ltd

The question is what is required, and what could be the role of Australia governments in this process to achieve international competitiveness in the chemical industry? In this context it is useful to note that the Federal government has no specific policy for the chemical industry while some State governments practice facilitation forms of assistance in response to investment proposals. Any policies or practices are not specifically aimed at the chemical industry. In our opinion, government has been inept in promoting the chemical sector even undertaking initiatives that have undermined its long term development and influenced by foreign companies and their representatives in Australia. 

Given the vast resource base of Australia, it could be 40-60 per cent larger (to around 2 per cent of the economy - arguably a conservative estimate). In perspective, this could represent directly a further 25 000 jobs and a substantial reduction in the trade deficit in chemicals. The indirect economic benefits are large.

Press on the above graph to see a brief chronology of its development.

Performance

  A six year relative growth is summarised in the following graph.

Click on graph to see full size

 (Detailed graphs)

Employment

Reduced protectionism has promoted efficiency improvement measures with job losses at older centres and product range rationalisation. In 1997-98 the chemical industries employed just 45 165 persons - in the 1970s it employed 70 000, 60 per cent more!

Basic chemical synthesis activities employed 13 000 (down 25 per cent from 20 000 in 1971-72) and chemical formulating 32 000 (down 25 per cent from 40 000 in 1971-72).

Trade performance

Has the chemical industry hit a ceiling? Australia's chemical industry has shown remarkable resilience in adjusting to the virtual phasing out of import tariffs since 1987. Until 1995 exports of chemicals had been growing strongly from one-fifth to reach one-third the value of imports and its trade deficit reached A$5 billion.

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However, in the three years to end 1998, exports have failed to keep up with the growth in imports with the trade deficit increasing 50 per cent from A$5 billion to A$7.5billion by end 1998. As shown in the graphs, most industry sectors have shown a trend of exports failing to keep up with imports (with the export/import ratio actually falling for the first time during 1998). Only the colourants sector (largely titanium dioxide pigment) has maintained its position and even the pharmaceutical industry is failing to maintain its track record. On a state basis, only Western Australia has held its export to import ratio while previously strongly performing Queensland, has shown the greatest decline.

Chemicals account for 20 per cent of Australia's current account

deficit (of which one-half is by the state of New South Wales - that state was in the 40's to 60's the heart of Australia's chemical industry!). Read the history.

It is interesting to note, that Victoria and New South Wales, not only account for three-quarters of that deficit - they are under-performing - despite being the original and key chemical manufacturing centres in Australia.

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And are things improving?

Press on graph to see full size.

The last three years show a flattening and perhaps the beginnings of a downtrend. No improvement! A serious trend given Australia's manufacturing sector is improving its trade performance - chemicals are underperforming!

A state by state comparison (five digit resolution available on request) .

Western Australia

South Australia

New South Wales

Queensland

Products

The products produced in Australia too have decreased markedly and since 1990 alone, EDC/VCM, phthalate esters and oxo alcohols and speciality chemicals, styrene by Dow and polypropylene by Orica are no longer produced. Industry ownership has extensively rationalised including with the production of PVC resin, polyolefins and polystyrene.

Many remaining producers are well below world-competitive scale though new world-class industry is emerging.

Structure

About two-thirds of the A$18bn chemical industry produces chemicals by the physical blending of chemicals

 

Press on the above graph to see it as a bar chart 

The synthesis section, is foreign-owned, one-third or less of world-scale and three decades old.

The following graph prepared by ACTED shows the operating cost penalties of small scale manufacture.

Since 1982, the significance of sectors of the chemical industry have changed substantially with contraction of the commodity chemical sector, notably in polymers. A significant influence has been the reduction of import tariffs that favoured those producing commodity chemicals such as synthetic resins. 

The following pie graph identifies Australia's Industry associations by industry sector. Press on graph to see full size.

Based on Australia's resource base, the synthesisers could increase their significance from the present one-third to 40 per cent of the chemical industry.

It is relevant to note the dramatic changes that have occurred in the last decade with the removal of import tariffs. With many closures, there have been significant shifts in ownership. Even Botany, the centre of Australia's petrochemical industry owned by ICI, now Orica, is soon to be predominantly owned by the US Exxon/Mobil and Huntsman Corporation.

Key characteristics

The industry may be described in many ways.

One way to look at it is by origin which sometimes provides an outlook for the future. See our industry section for more information.

 

New investment

New investments including expansions with titanium dioxide pigment, sodium cyanide, ammonia and ammonium nitrate and ammonium phosphate fertiliser. One of the most exciting potential investments is an integrated petrochemical project for Western Australia. This US$1.2bn project could seed the development of a new industry in the region. ACTED believes it has less than one in ten chance of success but the government will have to provide some concessions recognising those offered by regions that compete for investment. The project would provide significant benefits to Australia. Other large-scale projects under assessment are ammonia-based including Plenty River Corporation in the Pilbara, BHP Petroleum's/Incitec's Southern Fertiliser in Victoria, and Queensland Fertilizer Assets Limited at Pickanjinnie near Roma Queensland. Anaconda, a nickel producer, may become a phosphate fertiliser manufacturer.

Australia is a major importer of caustic soda (1Mtpa!), VCM (240 000 tonnes pa), silicones (A$100m pa), PET resin (60 000 tonnes) etc. We make no comment on their competitiveness however.

Detailed information.

Companies Since the 1940s, Australia's chemical industry has been dominated by Orica (formerly ICI Australia). Its key manufacturing centre at Botany, New South Wales is now focussed on polyethylene. With Orica establishing a minority interest in a joint venture in polyethylene with the only other producer Kemcor, it has nearly sold out of Botany. This jv is called Qenos. In 1998, Orica announced the sale of its Botany-based surfactant business to Huntsman Corporation of the US. Orica has significant interest in the ammonia, ammonium nitrate and the explosives business which now represent more than one-half its business. Other activities by the company include the production of PVC resin from imported VCM which it now seeks to sell, surface coatings (paints) and sodium cyanide.

Other key manufacturers include..

Qenos at the Altona and Botany complexes producing polyethylene, polypropylenes and synthetic rubber.

Huntsman Chemicals produces styrene resins (and phenol and acetone).

Nufarm Coogee for chlorine

Penrice Soda Products produces sodium carbonate (soda ash) in South Australia.

Titanium dioxide is produced by Millennium and Tiwest in Western Australia.

Sodium cyanide is produced by Orica, Ticor and AGR.

Western Mining Corporation an ammonium phosphate fertiliser plant in Queensland.

The future?

The protection underpinned ICI Australia who established and dominated the Australian chemical industry for half a century has become an international explosives company as Orica. Given its underperformance in Australia, (see our ammonia and explosives report) its ultimate purchase by a company such as Sasol of South Africa (that has interest in expanding the explosives business) is possible in our opinion. 

Qenos will almost certainly assume full control over the JV, and could be taken over by a company such as Huntsman Corporation that has already purchased Monsanto Australia (Chemplex as it was) and the surfactant business at Botany.

The PVC industry has consolidated around the Laverton North production as Australian Vinyls.

Australia will remain a Stage 1 development nation (commodity chemicals vulnerable to the vagaries of exchange rates and energy and other factor costs).  (Our presentation to the House of Representative Inquiry may be of interest). 

We will provide a detailed analysis later (some quick

thoughts).

For more detailed information.

Government Since the Federal Government reduced import tariffs, its key influence on current industry is via anti-dumping legislation and taxation. It maintains research and development tax concessions (125 per cent reduction from assessable income) and export assistance.

There is today an Agenda on Chemicals.

State Governments assume an influential role through facilitation measures that include the provision of land and related infrastructure.

With import tariff cut to a maximum of 5 per cent, the governments now have a vital role to promote Australia being internationally competitive.

For more detailed information about government agencies.

Regulations Australia has world-class regulations controlling the manufacture, distribution, use and disposal of chemicals.

Industry sets international standards as expressed by the adoption of Responsible Care by members of the chemicals industry association, PACIA (the Plastics and Chemical Industry Association, that should become the .......Importers Association).

For more detailed information.

Titanium Dioxide and Titanium Dioxide pigment

See also synthetic rutile.

Titanium dioxide pigment (TiO2) is a white powder with high opacity, brilliant whiteness, excellent covering power and resistance to colour change. These properties have made it a valuable pigment and opacifier for a broad range of applications in paints, plastic goods, inks and paper.

The pigment is manufactured by processing naturally occurring the titanium-containing rutile or ilmenite minerals. Rutile is an impure form of titanium dioxide whereas ilmenite contains titanium combined with iron as a compound oxide. Though common throughout the world, they are most readily exploited in Australia, USA, India and South Africa.

In Australia nearly all titanium dioxide is produced from ilmenite as it naturally occurs in accessible high concentrations and in a form which allows the ready extraction of the rutile. These favourable factors have made ilmenite a competitive raw material for Australia's producers reflected in high export activity.

Low energy cost regions use the slagging process. 

Australia supplies about 40 per cent of the world's ilmenite and about 25 per cent of its rutile. In contrast to its dominance in titanium minerals, Australia supplies only about a 3 per cent share of the world's titanium dioxide pigment production of around 4 million tonnes. This imbalance implies significant opportunity for adding further value.

In 1995, Western Australia produced 160 000 tonnes of titanium dioxide pigment valued at around $350 million.

By June 1998, Australia is anticipated to export A$1.1 bn of titanium minerals of which two-thirds is exported to Europe and North America.

Technologies

Titanium dioxide pigment may be manufactured by either the sulfate or the chlorine process (Australia now only use the chlorine process). The technology for the chloride process is tightly held and Ticor is license by Kerr McGee under which brand name it also markets its pigment.

Sulfate process

The sulfate process was the first commercial scale technology used to convert ilmenite to titanium dioxide. Producing large quantities of waste iron sulfate and producing an inferior product for most applications, few sulfate process plants are now being built. In 1996, Tioxide, a sulfate-based plant at Burnie, Tasmania, ceased operation after some forty years in operation using ilmenite shipped from Western Australia and local sulfuric acid from metal smelting operations in Tasmania. The plant produced large volumes of iron sulfate waste product. The sulfate process produces a form of pigment called anatase, which is preferred over chloride-derived pigment for use on papers, ceramics and inks. In cheap electricity locations such as South Africa (coal power) and Norway (hydro power), the ilmenite may be slagged to produce rutile and iron. In Australia, the Becher process produces iron oxide as waste which is retuned to the mine site.

Chloride process

The newer chloride process avoids the iron sulfate waste problem and, at larger scales, is cheaper to operate. This process requires the ilmenite to be processed to the rutile form (ie. removal of the iron component to yield crude titanium dioxide [synthetic rutile]) for which the Becher process was developed in Western Australia. Typically 1.06 tonnes of synthetic rutile is required for each tonne of pigment.

The chlorine process, as now exclusively used in Australia, reacts chlorine with synthetic rutile to form volatile titanium tetrachloride which is then oxidised leaving behind iron chloride and other impurities with the bulk of the chlorine re-cycled. Consumption of chlorine is therefore related to the amount of iron oxide (and alumina) left in the synthetic rutile which is typically 4 per cent. As iron chloride is environmentally harmful it is treated with lime to convert it to iron oxides and the calcium chloride drained to sea.

About one tonne of chlorine is required to produce 5 to 6 tonnes of titanium dioxide pigment (depending on the iron content of the rutile used consuming the chlorine as ferric chloride and with about one-third of chlorine ending up as hydrogen chloride). Tiwest is now supplying hydrochloric acid to Coogee for conversion to ammonium chloride (for use in synthetic rutile production).

By using rutile (and not the iron-containing ilmenite), the chloride plants avoid the production of much larger amounts of iron chloride that has to be disposed off (eg. by deep well disposal as used by Dupont of the USA).

After removal of vanadium salts, and further fractional distillation, the pure titanium tetrachloride is reacted with oxygen at high temperature to produce titanium dioxide. The titanium dioxide is ground and coated to different grades. The liberated chlorine is recycled. In other words, chlorine is larely consumed as iron chloride which is converted to iron hydroxide after treating with lime. The resultant calcium chloride and iron oxide can be safely disposed.

Worldwide there is a marked swing to the use of the chloride process with few new sulfate plants being established. The chloride process offers tighter product control, less labour intensive, and environmentally safer. Currently about about 60 per cent of the 4 million tonnes of pigment produced produced world-wide is produced by the chlorine process. Though declining in response to concerns about environmentally unacceptable waste, many sulfate plants have introduced innovative techniques deferring their closure. This status is contributing to depress prices for synthetic rutile.

The chloride plants require a high grade of rutile. The lower grades of ilmenite (52 to 57 per cent titanium dioxide) are exported by West Australian titanium mineral producers to oveseas sulfate-based plants and electric arc furnaces. The producers claim the lower grades of ilmenite could not be economically converted to synthetic rutile in the current world status of cheap slagged ilmenite (with zero nucleide content).

The nucleide issue is that the mineral sands contain monazite which typically contains 6 per cent of the radioactive element thorium (and some uranium. In 1990, some 13 000 tonnes of

monazite were produced but fell to zero due to competition from nucleide free sources such as China. There is interest in processing monazite by Rhone-Poulenc at Pinjarra.

The industry

About 40 per cent of the state's ilmenite production (about $80 per tonne) is converted to synthetic rutile ($470 per tonne) and of that 40 per cent, only about 30 per cent is converted to the pigment (valued at about $2 000 per tonne). In other words, pigment production could increase eight-fold!

There are two manufacturers of titanium dioxide pigment in Western Australia,Millennium International Chemicals (MIC, formerly SCM Chemicals Ltd) at Kemerton, Western Australia andTiwest Joint Venture at Kwinana, Western Australia.

Millennium Inorganic Chemicals's plant at Kemerton

Millennium Inorganic Chemicals (formerly SCM Chemicals)

Millennium Inorganic Chemicals (MIC, formerly SCM Chemicals and part of the Millennium Chemicals group) is located near the regional city of Bunbury some 150 kilometres south of the State capital of Perth. It uses the chlorine process in a plant established in 1990 with a capacity of around 80,000 tonnes. Located near high grade ilmenite deposits, it is well placed to expand and profitable. From 1964 to 1990 as Laporte Industries, a sulfate process operated in a plant producing 40 000 tonnes of pigment. Taken over in 1984 SCM relocated a few kilometres north to Kemerton and adopted the chlorine process (increasing production to 70 000 tonnes per year). The company was renamed Millennium Inorganic Chemicals in 1997.

Synthetic rutile (ie. after the Becher process) is purchased by Millennium Inorganic Chemicals on the open market from West Australian mineral sand mining companies.

In February 2000, MIC purchased Hanwha Ceramics becoming Millennium Performance Chemicals.

In 2001, the company expanded production to 95 000 tpa having signalled intentions to double its production train.

Tiwest Joint Venture The Tiwest Joint Venture (formerly Cooljarloo Joint Venture) was established in 1990 as a joint venture of Minproc and Kerr McGee. Unlike Millennium Inorganic Chemicals, it owns the mineral deposit (at Cooljarloo). Tiwest operates with a primary processing plant at Chandala producing crude titanium dioxide (synthetic rutile) from ilmenite from their mine near Eneabba. The operation uses the thermal Becher process to convert 220 000 tonnes ilmenite to 130 000 tonnes of synthetic rutile (94 per cent titanium dioxide). The iron oxide waste by-product is returned to the mine site. About one-half, 65 000 tonnes, of the synthetic rutile is used to produce pigment with technology based on the Kerr McGee 100 000 tonne USA plant.

Tiwest titanium pigment plant at Kwinana.

The Kwinana plant processes about half the rutile (produced at Chandala) to the pigment producing about 70 000 tonnes per year of titanium dioxide pigment. About 85 per cent is exported. The balance of the synthetic rutile, and all the natural rutile is sold largely to their part owners (Kerr McGee) in the USA.

Inputs Tiwest requires for each tonne of titanium dioxide produced (according to the Department of Resources Development "Downstream Processing" June 1996):

synthetic rutile - 1.2 t (92 % titanium) petroleum coke - 0.4 t oxygen - 0.8 t nitrogen - 1.2 t carbon - .2 t lime 0.2 t  

Zirconium ortho sulfate & zirconium oxychloride supplied by Hanwha and sodium aluminate provided by Coogee Chemicals are also used to modify the pigment to render it more suitable for specialised applications (varies the surface area). This is an important way for product differentiation into which extensive research has been applied.

Millennium Inorganic Chemicals Chemicals requires chlorine and 45 000 tpa oxygen supplied by BOC and 65 000 tonnes of nitrogen. (Air Liquide supplies oxygen to Tiwest at Kwinana.) Electricity About 1000 kW hours of electricity is required to produce one tonne of pigment from synthetic rutile. At a nominal industry value of A$0.06 per kilowatt hour, electricity would represent 4 to 5 per cent of the finished pigment (a total of around 8 per cent, allowing for around 4 per cent for the

production of synthetic rutile). The nature and outlook for the pigment industry could be influenced with access to cheaper electricity. For example, the disposition of Tiwest, currently located over three sites, hundreds of kilometres apart, could be different with cheap power that would promote slagging plants. The synthetic rutile plant at Chandala, roughly midway between the mine and the pigment plant, minimises the cost of returning iron oxide to the minesite but still taking advantage of lower costs locating at Kwinana to produce the pigment. Subject to other considerations, the plant could instead have been integrated with the pigment and electric iron billet plants.

In Nov 1997, it was announced Tiwest was establishing a cogeneration plant to that the production of 80 000 tpa of titanium dioxide pigment would require 14 megawatts of electricity per hour (and 20 tonnes of steam).

Chlorine

Chlorine is an important input for the pigment industry produced by two chloralkali plants. The two plants operate at small scale using current technology dedicated to the production of the expensive to transport chlorine on take or pay contracts. The scale penalty is however much less than the cost of shipping expensive to transport chlorine, although chlorine is claimed to be at least twice the cost of that produced by overseas plants.

Market

The Australian market for titanium dioxide pigment is estimated to be about 40 000 tonnes per year valued at $80 million supplied by the local manufacturers for all but 1 000 tonnes of imported pigment. About three-quarters of production is exported (Tiwest is 85 per cent exported)..

The large applications for titanium dioxide pigment are for the manufacture of paints (about 60 per cent), plastics (about 25 per cent), and paper and printing inks (about 15 per cent). The Western Australian market is estimated to be less than 1 000 tonnes of pigment.

The domestic price of titanium pigment is determined by imports and in 1987 was about 10 per cent above world traded prices as a consequence of import duties. The removal of tariffs has now eliminated that margin though imports remain at less than 2 per cent of the market (believed to be special specification forms of the pigment).

Turnover has been increasing at 3 per cent per year in recent years with both plants operating near full capacity with some debottlenecking at the Tiwest plant.

Competitiveness

Western Australia's two titanium dioxide plants are modern (commissioned 1990 and 1991) of world class standard in technology and scale (70 000 and 65 000 tonne capacity respectively).

Capital cost is a disadvantage for the pigment industry here. For Tiwest the cost is around A$4 500 per tonne of pigment compared with A$3 500 in competitive plants. Whereas competitive plants move their products an average of 500 km, the Australian producers move them an average of 5 000 km. Production to cash too is longer, 60 to 90 days cf 30 days for competitors..

Millennium Inorganic Chemicals and Tiwest are both favourably located with respect to synthetic rutile supplies - Millennium Inorganic Chemicals supplied by the southern suppliers and Tiwest using northern reserves of ilmenite for its plant. The titanium minerals are at internationally competitive prices less international freight costs. Their competitiveness is reflected in the pigment industry exporting about three-quarters of production overseas.

Though showing world competitiveness, access to low cost rutile is claimed to offset the cost of major overseas chlorine and electricity. Chlorine is also claimed to be twice the cost of competing plants (having been ten-times greater and electricity, though acknowledged to be cheap by most world standards, could be cheaper when compared to some Australian states.

Millennium Inorganic Chemicals has also been quite profitable recording an average of 28.5 per cent annual weighted average return on shareholders funds over five years (24 per cent for 1995-96). The figure was calculated as net profit after tax divided by shareholders funds expressed as a percentage. Source Business Review Weekly, February 17, 1997 prepared by IBIS Business Information.) This return places Millennium Inorganic Chemicals as 68th most profitable. For comparison, Australia's 100 biggest firms achieved 10.9 per cent for 1995-96.

Until closing in 1996, the other Australian producer of titanium dioxide, Tioxide at Burnie, Tasmania, had been using ilmenite shipped from Western Australian for use in a sulfate process. Producing large amounts of iron sulfate waste, before closing it responded to environmental concerns by switching to imported rutile slag typically containing 85 per cent titanium dioxide.

Western Australia titanium mineral sands plants typically convert less than one-half the ilmenite to synthetic rutile of which one-third is supplied to Western Australia's two pigments plants with the balance exported. The balance of ilmenite not converted to rutile is often of a lower grade (52 to 57 per cent titanium dioxide) which is exported largely to sulfate-based plants. In other words, some seven-eighths of the state's titanium mineral is exported as raw materials for overseas pigment plants.

Synthetic rutile prices have been declining as the swing from sulfate to chloride plants has been slower than predicted and through competition from South Africa's low cost chloride-grade rutile slag producers. (prices in 1994-98 are 17 per cent lower than in the 1980s in real terms). This pressure is being reflected in declining prices for ilmenite and synthetic rutile but of course, as their raw material, is helping Western Australia's pigment industry. Tiwest, also helped by improving pigment prices, announced plans (June 1994) to double pigment production with an outlay of $168m.

Though to a large extent a commodity product competing on price, research is being extended to producing superior forms of the pigment. Tiwest is producing a new grade of titanium dioxide coated with zirconium sulfate to improve the UV stability of the medium in which the pigment is applied. (Zirconium sulfate is produced at Hanwha). The availability of local zirconium chemicals, may help the pigment industry and create a market niche.

Outlook Expectations of rapid world growth (3 per cent, or some 100 000 tonnes per year) has led to investment in chloride plants helped by the closure of sulfate process units. One industry source suggested a world capacity utilisation rate of 79 per cent for sulfate producers and 92 per cent for chloride plants (an average of 86 per cent for all plants). Helped by innovative technology, the closures of sulfate plants have been below expectations sustaining the market for the cheaper, lower grades of ilmenite. As a result, Western Australia's titanium mineral producers find it more profitable to export ilmenite (claimed to be for lower cost sulfate and lower cost iron chloride deep well projects) than to add value to produce synthetic rutile.

Clearly any enlargement (up to eight-fold) of Western Australia's pigment industry will relieve the pressure on the ilmenite and synthetic rutile industry. At present, overseas pigment plants add about $1.6 billion, or about three times the value currently added in Western Australia to the state's titanium minerals. It is worth noting also that while Australia produces around 26 per cent of world production of titanium minerals, it produces just 4 per cent of world production of titanium dioxide pigment!

The titanium dioxide pigment industry has the theoretical potential to approach the turnover value of the alumina industry.

In the Goldfields, a sulfate-derived pigment could be viable in this region where sulfuric acid is available on competitive terms and with fewer environmental issues to preclude the dumping of iron sulfate waste.

Deferred expansions

Within weeks of each other in June 1996, the two pigment manufacturers in Western Australia, announced plans for doubling their production capacity.

Tiwest, on June 13, announced plans to double pigment production from 80,000 to 165,000 tonnes with an outlay of A$160M. Ticor, which owns one-half of Tiwest with Kerr McGee, indicated they saw prices around US$2000 to US$2500 per tonne for the next few years (having been US$1300 in 1993). The company has been processing about one-half of its synthetic rutile from ilmenite at its Chandala plant north of Perth (midway between its ilmenite deposits at Eneaba and its pigment plant at Kwinana).

Millennium Inorganic Chemicals Chemicals announced a A$470M plant expansion doubling titanium dioxide pigment production to 190,000 tonnes within two years. The company indicates it did not have contract to underwrite its increased production and was seeking new markets.

 

On March 5, 1997, Tiwest announced (West Australian) that because of a fall in the price of pigment from US$2080 to US$1400, the expansion has been deferred. A price of US$1700 is sought. (Ticor also incurred a A423million loss last year). Current production is around 80 000 tonnes.

See also synthetic rutile.

Titanium metal

Titanium metal is produced by the Knoll process, chlorinating rutile to titanium tetrachloride and reduced to titanium sponge using magnesium metal. The sponge is converted to the titanium in the ingot form in an electric arc furnace. Typical power consumption is around 2.5Megawatts per tonne produced equivalent to 10 per cent of final product.

Involving titanium tetrachloride, the process is ideally integrated with the manufacture of titanium dioxide pigment.

Australia presently does not manufacture magnesium metal. The process is moderately energy-intensive. A downturn in world demand has created some current capacity under-utilisation.

Contacts Tiwest Joint Venture

Australia's Chemical Industry - Overview

This section provides an overview of Australia's chemical industry.

More detailed information also through the following...

Australian States

Historical development

Economics and performance

Products

Companies

See also 

Introductory overview.

Opinions, notably on role of government

Industry today

1. Organic chemicals

Overview

Australia has two ageing petrochemical complexes - one at Altona in Victoria dominated by Qenos (formerly Kemcor Australia including the JV with Orica in polyethylene resins) and another at Botany, in New South Wales owned by Orica. Orica's operations now only produces polyethylenes in competition with Qenos, and ethoxylates and polyols. Qenos also produces polypropylene and synthetic rubbers. 

The Altona complex

The Altona complex today has seen the progressive domination of Qenos (former Kemcor Australia) that includes the former Altona Petrochemical Company. The Altona complex uses less than its requirements of competitive Bass Strait gas. Though variously announcing plans to substantially increase polyethylene production, these have not come about.

Altona complex

Product Company Details

polyethylene resins Qenos LDPE

polypropylene resin Qenos former Hoechst Australia plant

synthetic rubber (SBR and BR) Qenos local butadiene.

propylene glycols Dow Chemicals imported propylene oxide

acrylic and styrene-butadiene dispersion latices.

BASF Australia imported acrylic esters

PVC resin Australian Vinyl Corporation

imported VCM. Joint company of Orica and Auseon.

The Botany complex

The Botany complex has consolidated its activities through by its JV owner Qenos (former Kemcor and Orica) in polyethylene resins (LDPE and LLDPE). The complex also produces ethylene oxide and its ethoxylate derivatives (surfactants, polyols, hydraulic fluids and triethanolamine), caustic soda and chlorine which is now owned by Huntsman Corporation.

In 1996 Orica began to use ethane by 1400 km pipeline from South Australia that now offsets its fundamental feedstock disadvantage having previously used LPG (shipped from Bass Strait) and naphtha (from the Kurnell Refinery). Its move to using ethane promoted Orica to close its polypropylene plant (though continuing to refine propylene from Kurnell which it sells to Basell at Clyde).  

Other major petrochemical operations

Huntsman Chemicals operates a styrene and styrene derivative plant at West Footscray, Victoria (near Altona) also producing some phenol and acetone. The key raw material, benzene, is 80 per cent imported.

Basell Australia operates two polypropylene plants at Shell refineries in Geelong Victoria and Clyde New South Wales. It uses propylene produced as a by-product of Shell's refining operations plus some purchased from Orica (that refines propylene acquired from the Kurnell refinery since closing its polypropylene plant).

Incitec ammonia, urea and ammonium nitrate operations at Newcastle New South Wales and Brisbane Queensland.

Wesfarmers ammonia and ammonium nitrate at Kwinana Western Australia. Petrochemical capacity summary

Other organic chemicals

Note: Follow the links under the Product heading!

Product Company Details

2,4-D, trifluralin, metham sodium

Nufarm at Laverton Victoria and Kwinana, Western Australia.

see carbon disulfide).

Acetone Huntman Chemicals at West Footscray, Victoria.

Acetone (cumene route) 12 000 tpa.

Acrylic-based flocculants and

Nalco Australia, Allied Colloids at Wyong NSW andCiba

Acrylic acid (acrylic esters and

viscosity modifiers (resource development industry)

Specialty Chemicals (formerly Imdex Chemicals) located in Kwinana, Western Australia. Rohm and Haas at Point Henry Victoria produces acrylic polymer emulsions in water from imported acrylic esters.

SNF Australia with acrylic polymers.

See also acrylic acid.

acrylamide) is imported.

Ammonia Incitec (72 per cent owned by Orica, the balance listed) plants at Newcastle, New South Wales and Brisbane, Queensland (plus ammonium nitrate and urea) and

CSBP at Kwinana, Western Australia

Ammonia

Benzene as BTX BHP coking plants. Benzene production (20 000 tpa) for Huntsman Chemicals manufacture of styrene and phenol

Carbon black Hydrocarbon Products at Altona and Continental Carbon Petroleum at Kurnel in NSW

These purchase creosote tars to manufacture carbon black. Carbon black is sold as pigment and stabiliser for plastics and rubbers. Each supply about one-half the Australian market

Creosote Koppers Australia Creosote is produced as a component of oil refinery tars and from BHP coke ovens. Koppers Australia at Newcastle NSW purchases crude tar from BHP supplemented by imports (one-third?) of these tars. Koppers produces binder pitch, creosote oils, naphthalene, and crude tar acids.

Dimethyl ether CSR Distilleries Group, Pyrmont, NSW

About 3 000 tpa using methanol. Since 1988 as an aerosol propellant.

Ethanol (ethyl alcohol)

Manildra Group in Victoria and by CSR Distilleries in Qld.

Produced by fermentation. Australian market around 50 000 tonnes

Esters of fatty acids

MegachemWide range of fatty acid esters from imported fatty acids.

Ethylene glycol and ethoxylates

Huntsman. Botany NSW.

Ethylene oxide Huntsman Botany NSW.

Fatty acids (stearic and oleic acids)

Symex Holdings at Port Melbourne

Acid hydrolysis of animal and vegetable fats. 

Oleine. From tallow, palm oil and olive oil with total production of 15,000 tonnes (2000 representing 9 per cent of world production). Major applications are as additives for polymers (35%), textile auxiliaries (25%), surfactants (20%) and lubricants.

Stearine. Total production is around 22 000 tpa (representing 1.3% of world production). Major applications are in rubber, plastic lubricants, candles and cosmetics).

Glycerol, co-produced with fatty acids, is also imported.

Aside from the use of vegetable oils, Symex uses 60,000-70,000 tonnes annually of tallow representing 95 per cent of

fats used.

Symex also produces Distilled fatty acids from coconut oil, canol oil and tallow. 

Formaldehyde and formaldehyde-based adhesive resins

Four plants operated by Orica (Deer Park Victoria - iron oxide catalyst), Borden Australia 

Laverton North in Victoria - (silver catalyst process) and 

Murarne in Queensland) and 

Dyno in Western Australia.

These plants purchase methanol for conversion to formaldehyde and the urea is purchased from Incitec. (Formaldehyde is not traded being unstable). The two Victorian plants purchase the methanol on-line from the BHP plant.

Glycerol (glycerine)

Symex Holdings at Port Melbourne

By acid hydrolysis (splitting) of fats (tallow and imported palm oil). Principally producing fatty acid co-product, production is inadequate to supply Australia's needs.

Latex emulsions BASF at Altona Victoria. Dow Chemical at Altona

BASF purchased plant and market from Huntsman. Styrene purchased from Huntsman, butadiene from Kemcor.

Metham Sodium Nufarm Western Australia Soil fumigant

Methanol (methyl alcohol)

BHP Petroleum (with Orica Katalco of the UK) Wyndham 20 km west of Melbourne, Victoria

About 60 000 tpa methanol supplying about 70 per cent of Australia's needs.

Naphthalene BHP’s steel plants recovered (separation by distillation process) by Koppers Coal Tar Products operating at Newcastle NSW.

6 000 tonnes is purchased by Albright and Wilson at a new plant at Wetherill Park in New South Wales to produce a specialist surfactant (naphthalene sulfonate formaldehyde condensate) for use in mortar, cement and concrete.

Naphthalene sulfonate formaldehyde condensate

Albright and Wilson at Wetherill Park in NSW.

About 13 000 tpa (used as cement additive)

Phenol Huntsman Chemicals at West Footscray, Victoria.

Phenol (cumene route) 20 000 tpa

Polyethylene resins

Orica (LLDPE & LDPE) and Kemcor (LDPE)

LLDPE, LDPE, HDPE

Polyols, ethylene oxide oxide-based

Orica at Botany Australia Used to produce ethoxylates (non ionic surfactants (inc. nonyl phenol)

Polyols, propylene oxide-based

Dow Chemicals From imported propylene oxide

Polypropylene resin

Shell Refineries at Geelong, Victoria and Clyde, New South Wales. Kemcor at Altona Victoria

Polypropylene

Polystyrene and other styrene polymers

Huntsman Chemical Corporation at West Footscray and Dow Chemicals at Altona, Victoria under JV of Polystyrene Australia.

The company has a joint venture with Dow Chemical for marketing and distribution of general-purpose and high-impact PS in Australia and New Zealand. 80 per cent from imported benzene. Some 60 per cent of the 80 000 tonne polystyrene market is produced by the Polystyrene Australia.

Polyvinyl chloride Australian Vinyls Corporatio with a 90 000 tpa plant at Altona and Orica with a 140 000 tpa plant at Laverton Victoria).

From imported vinyl chloride monomer (200 000 tonnes

Specialist chemicals and preparations

Dow Chemicals and BASF for textiles, leather and paper

Styrene rubbers Qenos at Altona, Victoria SBR and BR. Latex emulsions

are prepared by BASF and Dow Chemical.

Vanadium pentoxide

Australian Vanadium, NW WA

Xanthate chemicals

Coogee Chemicals5 000 tonnes capacity. See also carbon disulfide

Inorganic chemicals Inorganic chemical manufacture in Australia is represented in particular by sodium carbonate, superphosphate fertiliser, titanium dioxide pigment, sodium polyphosphate and sodium cyanide.

Note: Follow the links under the Product heading!

Product Company Details

Alumina (Alcoa of Australia and Worsley Alumina in Western Australia, Queensland Alumina and Nabalco in Queensland) and hydrated alumina by Alcoa in WA.

Alumina

Aluminium fluoride Proposed by Alichem, Kwinana Western Australia

Aluminium fluoride proposed 40 000 tpa.

Ammonium chloride Coogee Chemicals produces 8 000 tpa in a 25 per cent solution form.

Ammonium chloride

Ammonium phosphate

Queensland phosphates MAP, DAP fertiliser

Caustic soda and chlorine

Around eight 5 000 to 20 000 tpa chloralkali units operate around Australia to produce chlorine including two dedicated to the two titanium dioxide plants in Western Australia.

More information Caustic soda and chlorine. See also our reports on caustic soda and chlorine

Gallium chloride Rhodia Pinjara Western Gallium chloride (currently

Australia closed)

Industrial gases BOC, Air Liquide, Linde Industrial gases

Lime (calcium oxide)

Various Lime (calcium oxide)

Lime sulfur (calcium polysulfide)

Balhan Industrial, at Moolcap Victoria.

Used as agricultural fungicide, metal plating waste recovery and mineral flotation aid.

Lithium carbonate Gwalia Consolidated. Currently mothballed

Magnesium oxide Causmag at Young NSW QMAG at Rockhampton

Manganese dioxide/sulfate

Sovereign Resources Has manganese ore deposit in Nullagine region of WA. Can mine 20 000 tpa. Proposed leaching with sulfuric acid to sulfate (fertiliser grade) and possible plant at Port Hedland to produce electrolytic grade dioxide.

Manganese dioxide (Electrolytic)

Delta Electrical Industries of South Africa at Newcastle, NSW

About 23 000 tpa suppying about 10 per cent of world production (used in dry-cell batteries - value US$1800 per tonne). Sold by BHP for A$57m

Mercurial fungicides (alkoxy mercury compounds)

Alpha Chemicals at Dee Why, NSW.

Used on sugar cane crops.

NickelProduction in Western Australia

Nickel section

Peroxides Solvay Interox in Banksmeadow, New South Wales

Products include hydrogen peroxide, peracetic acid and sodium perborate (tetra and monohydrate).

Phosphates Albright and Wilson A&W: Inorganic phosphates (food and industrial grades)

(Australia)

Western Mining Corporation (WMC)

WMC: Ammonium phosphate fertiliser.

Silicates, aluminates, sulfates

PQ Australia in NSW, Coogee Chemicals (in WA Hardman Australia in NSW.

Coogee Chemicals produces a sodium silicate at Kwinana Western Australia (dissolving silica in sodium hydroxide) for use by the Millennium Inorganic Chemicals titanium dioxide pigment plant

Silicon metal Simcoa at Kemerton). Silicon metal for metal alloys

Sodium carbonate (soda ash)

Penrice Soda Products at Osborne, South Australia

Sodium carbonate (soda ash) by solvay process producing around 400 000 tpa.

Sodium cyanide Orica and Ticor in Queensland and Australian Gold Reagents in Western Australia

Sodium cyanide - production capacities of about 30 000 tonnes each,

Sulfuric acid at metal smelters

Superphosphate fertiliser

manufactured in all states Superphosphate fertiliser from imported phosphate rock and sulfuric acid,

Titanium dioxide pigment

MIC Chemicals at Australind and Tiwest at Kwinana (each producing about 80 000 tonnes).

Titanium dioxide pigment

Zirconia, Zirconium hydroxide and sulfate

Hanwha Advanced Ceramics at Kwinana

 

Company Location Feedstock Products Capacity (nameplate tpa)

Australian Vinyls Corporation

Altona, Victoria vinyl chloride monomer (imported)

polyvinyl chloride resin

PVC resin 220,000

(Orica 140 000 and Auseon 80,000)

BHP Wyndham, Victoria

natural gas methanol methanol 60 000

Dow Chemical Altona Victoria propylene oxide (imported), butadiene. Styrene (Huntsman)

polystyrene, polyols, SB latex, epoxy and vinyl ester resins

62,000 propylene oxide applied to polyols. 20,000 polystyrene (JV with Huntsman)

Huntsman Corporation

Botany ethylene (ethylene oxide)

Ethoxylate surfactants, glycols, ethanolamines

35,000 ethylene oxide that is converted to the derivatives

Huntsman Chemical Co

West Footscray (near Altona) Victoria

benzene (80% imported), ethane, propylene

styrene (exports) polystyrene, phenol, acetone, phenolic resins, unsaturated polyster resin polymers

styrene 100,000 polystyrene 45,000 phenol 20,000 acetone 12,000 variable

Orica Botany, New South Wales

ethane ethylene LDpolyethylene, LLDpolyethylene,

ethylene 260,000 LDPE 90,000 LLLDPE120 000

Kemcor Australia

Altona, Vic gas oil & ethane ethylene butadiene

ethylene propylene butadiene LLD polyethylene HD polyethylene SBR rubber BR rubber

ethylene 220,000 propylene 60,000 (LDPE 30,000 closed Nov 2000) HDPE 100,000 & 90,000 polypropylene

45,000 (SBR 20,000 closed 2000.)

BR 10,000 

Basell Australia Clyde, NSW & Geelong, Victoria

refinery gas polypropylene resins

Geelong 120,000& Clyde 70,000

Key petrochemicals - by company

Petrochemical Company Production

Ammonia Incitec two 250 000 plants (Newcastle and Brisbane)

Wesfarmers (WA) 240 000

Ethylene Kemcor 220 000

Orica 260 000

Huntsman 30 000

Propylene Basell (Shell Oil) 200 000

Kemcor 60 000

Australian refineries 70 000

LDPE Orica 90 000

LLDPE Orica 120 000

HDPE Kemcor 100 000 & 80 000

Polypropylene Basell 120 000 (Geelong) & 70 000 (Clyde)

Kemcor 45 000

Polystyrene Polystyrene Australia 60 000 (40,000 &20,000)

Rubber  (BR) Qenos now Kemcor 10 000 tonnes butadiene rubber

VCM Australian Vinyls 120 000 and 80 000 (est.)

Styrene Huntsman 100 000

Ethylene applications in Australia.

LDPE 130 000

LLDPE 110 000

HDPE 170 000

Ethylene Oxide 35 000

Styrene 30 000

Total 430 000

Outlook.With abundant oil and gas reserves, coal and minerals in an increasingly competitive country, Australia has outstanding potential to manufacture a broad range of chemicals. World class capital-intensive titanium dioxide pigment and alumina manufacturers, sometimes even using inferior raw materials, are successfully selling into a highly competitive world market.

The rationalisation is anticipated to slow with offsetting growth in new projects, notably in Western Australia. Orica's Botany plant increasingly moving to ethane-derived petrochemicals with access to South Australian ethane.

There are many opportunities (see also Western Australia). Australia is the worlds largest importer of caustic soda (used for alumina production). Yet though simply manufactured from common salt and energy, Australia still imports nine-tenths of its needs. In Western Australia salt and energy are produced along side each other for export as raw materials and energy (at the Burrup Peninsula in the north west). An inadequate market for co-produced chlorine is claimed as an obstacle for a world scale chloralkali plant with Australia becoming increasingly competitive, this may change.

Presently seven-eighths of Australia's production of titanium minerals are processed overseas. The evidence with expanding production suggest vast export potential.

Opportunities

The chemical industry has improving opportunity to expand based on Australia's resource endowments and the nearby fast growing Asian markets. There are many favourable influences as for example the deregulation of the gas industry in Western Australia with prices falling by one-half. In response, BHP has made a US$1bn investment for production of direct reduced iron). Lower raw material and operating costs will favour world-class energy-intensive activities that may include a petrochemical project and the production of magnesium metal.

The opportunities for manufacture will be described in updates to this section. This will include caustic soda. During 1995, Australia imported 1.1 million tonnes of caustic soda valued at A$385 million. Not only indicating potential, it also points to the awkwardness of the industry. Australia is a major exporter of energy by way of natural gas (and coal) and salt, in addition to caustic soda, it also imports some A$100 million of vinyl chloride monomer containing some 100 000 tonnes of chlorine. There are many opportunities.

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