By ANTHONY HARRUP

MEXICO CITY -- Mexican chemicals company Mexichem said it is considering a joint venture with Occidental Chemical (OxyChem) to produce 500,000 tpy of ethylene in order to secure long-term supplies for its polyvinyl chloride (PVC) plastics production.

In a filing Thursday with the Mexican stock exchange, Mexichem said it signed a memorandum of understanding with OxyChem, a unit of Occidental Petroleum, on July 30 to build an ethane-based cracker that would produce 500,000 tpy of ethylene.

Most of ethylene would be used by OxyChem at its plant in Ingleside, Texas, to produce 1 million tpy of vinyl chloride, a raw material used in the production of PVC plastic, which it then would sell to Mexichem under a long-term supply contract.

Mexichem said the agreements, along with a joint investment with Mexico's state oil company Petroleos Mexicanos (Pemex), would guarantee the supplies it needs for its PVC production at competitive rates.

A feasibility study for the new cracker is expected to be ready in the second quarter of 2013.

If the project goes ahead, the plant would go into operation in 2016, the company said.


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