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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 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!
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
Ammonia
urea) and
CSBP at Kwinana, Western
Australia
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)
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 BHPs 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
Polypropylene
Altona Victoria
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
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.
Alumina (Alcoa of Australia and
Worsley Alumina in
Western Australia,
Queensland Alumina and
Alumina
Nabalco in Queensland)
and hydrated alumina by
Alcoa in WA.
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
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
Corporation (WMC)
A&W: Inorganic phosphates
(food and industrial grades)
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,
styrene (exports)
polystyrene,
phenol, acetone,
phenolic resins,
styrene
100,000
polystyrene
45,000
propylene unsaturated
polyster resin
polymers
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.
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
notice. Products and companies referred to are trademarks or registered trademarks
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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.

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 performance
Export 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 investment
The 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
239

198
(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).

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.
Investment
It 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 profile
For 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.
Employment
In 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.

Structure
As 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

Performance
Relative 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.

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

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.

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 23%
Pigments and preparations based on titanium dioxide 388380079 10%
Alkaloids of opium and their derivatives; salts thereof 119398348 3%
Medicaments cntg hormones, (excl. insulin, adrenal), steroids used as hormones, in doses or for retail sale 116861459 3%
Wheat gluten 89266443 2%
Casein 77400518 2%
Aluminium hydroxide 72714457 2%
Blood fractions (incl. antisera); vaccines 63877491 2%
Preparations for use on the hair 59870397 2%
Silicon 56728246 1%
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 17%
Heterocyclic compounds, with nitrogen hetero-atom(s) only, nes 248781392 2%
Beauty or make-up preps for skin (excl. medicaments, incl. sunscreen/suntan preps); manicure/pedicure preps 246456448 2%
Sodium hydroxide in aqueous solution (soda lye or liquid soda) 230501381 2%
Diammonium hydrogenorthophosphate (diammonium phosphate) 218995605 2%
Chemical products and preparations, nes 186360635 2%
Medicaments (excl. hormones, steroids, antibiotics, alkaloids), not put in doses or in packs for retail sale 185800936 2%
Urea 167858290 1%
Blood fractions (incl. antisera); vaccines 157515223 1%
Heterocyclic comps with nitrogen hetero-atom(s) only, cntg pyrimidine, piperazine, triazine ring; nucleic acids 154813754 1%
A summary of trade is summarised in the following graph for the nine principal
sectors of the chemical industry (SITC groupings).

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.

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.

Press to see full size.
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 state
There 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

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.

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 Development
UNDER 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.
Industr
y
Rise and fall and.....?
By turnover, Australias chemical industry represents about 8 per cent (4.7 per
cent by employment) of Australias 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 industrys
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, Australias 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 governments
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 worlds 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 Australias north are very successful chemical industries operating in
countries without relevant natural resources. The changing industry
profile, growing markets, and adequate raw materials, suggests
Australias chemical industry can continue to evolve and grow with a
substantial contribution to Australias 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.

Press on graph to see full size
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.

Press on graph to see full size.
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 (TiO
2
) 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
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
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)
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)
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 BHPs 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
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
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.
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
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
Corporation (WMC)
A&W: Inorganic phosphates
(food and industrial grades)
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.

WEBSITE
http://www.acechem.com.au/about.html
http://www.chemform.com.au/contactus.html
http://www.pascoes.com.au/about-us/#sthash.V3Q7uEcV.dpbs
http://www.sigma-chem.com.au/about-us
http://cyndan.com.au/en/cms/coporate-info/1-corporate-information-cyndan-australian-
manufacturer-of-industrial-chemical-solutions
www.pricechemicals.com.au
http://www.nowchem.com.au/about/
http://www.aimchemicals.com.au/products.htm
http://www.imcdgroup.com/worldwide/australia/

Australian Chemical Industry

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