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News Releases

Apr 5, 2012

IDB to boost competitiveness of Mexico’s petrochemical sector

Braskem-Idesa joint venture to get US$600 million IDB A/B loan to finance the construction of integrated polyethylene plant

The Inter-American Development Bank (IDB) has approved a US$300 million A Loan complemented by a syndicated B loan of approximately US$300 million to finance Etileno XXI, Mexico’s biggest private petrochemical project.

The loan will be granted to Braskem-Idesa S.A.P.I., a joint venture by Brazil’s Braskem SA and Mexico’s Grupo Idesa, to develop, build and operate an integrated petrochemical complex. The complex will be comprised of one ethane cracker and three polymerization plants with a nominal annual capacity of approximately 1,050 kilo tons of polyethylene—a key input for plastic manufacturing. PEMEX Gas y Petroquímica Básica of Mexico will supply ethane that will be used as feedstock for the plant.

"The project strengthens the country’s competitiveness through the adoption of state-of-the-art technology that will help limit the industry’s carbon footprint,” said Hans Schulz, General Manager of the IDB’s Structured and Corporate Finance Department (SCF). “The IDB's involvement in this project also contributed to the development of programs that ensure gender balance and local job creation.”

Across a spectrum of industries, plastic is replacing high-priced commodities such as aluminum, wood, glass, and steel as a key building block to support business development. Polyethylene is used in a variety of industries as it comprises an essential component in the production of household appliances, cabling, vehicles, food packaging and more. By supporting Etileno, the IDB expects to bring about ample benefits for the Mexican small and medium enterprises in the manufacturing and food sectors.

“This new petrochemical complex is one of the most efficient in the Americas and will increase production of a key input for the plastics industry at very competitive costs,’’ said Jorge Gallon, the SCF project team leader.

The project will allow Mexico to leverage Brazilian know-how and state-of-the-art technology to modernize its production methods and, produce polyethylene, supporting the government’s strategy to boost competitiveness and support industrial development. In fact, Etileno XXI will use Mexico’s abundant ethane stock as the input for production, which is expected to result in 840,000 tons of CO2 emissions avoided—every year—when compared to naphtha-based production.

The project is expected to help improve the lives of broad segments of the Mexican population in the state of Veracruz. Located in the Nanchital municipality, the complex is expected to create a peak of 9,800 jobs during construction and 3,000 direct and indirect jobs when the plant begins operations in 2015.

Etileno XXI constitutes the largest foreign direct investment by a private Brazilian firm in Mexico. It is the largest project ever undertaken jointly by both countries and serves to foster economic ties between Brazil and Mexico. It is estimated that Etileno XXI will generate approximately US$200 million in tax revenues annually.

Structured and Corporate Finance Department

The IDB’s Structured and Corporate Finance Department manages all IDB non-sovereign loan guarantee loan operations for large-scale projects, companies, and financial institutions in Latin America and the Caribbean. Through its syndicated loan program, SCF plays a catalytic role in helping to mobilize third party resources through partnerships with commercial banks, institutional investors.

More information

Jorge Gallon
IDB project team leader
jgallon@iadb.org

Project information

Press contact

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