Acrylic Acid Technical Data

Acrylic Acid manufacture in Western Australia Australia

 An extract report without figures (one example included), footnotes and other references and appendices (written September 1995).

Introduction This

pre-feasibility study has considered a range of local and international issues including markets, industries, trends, raw materials and other factors that would influence the international competitiveness of an acrylic acid manufacturing facility in WA. These have been compared with relevant technical and strategic issues with particular emphasis on the interdependent relationship with the West Australian acrylic acid-using industry. It should be noted that some complex technical assessments crucial to the conclusion, such as the value of propylene to competing plants, purification and transport costs have been premised on part assessments normally undertaken in a more comprehensive feasibility study. Though these are not anticipated to substantially vary the general conclusions, some require further validation. The most significant issue is the cost of propylene as negotiated with the refinery. As discussed on page 67, its cost could be sensitive to the ownership of the purification plant.  A consideration in any feasibility study is the anticipated return on investment used to consider alternate investments and optimum scale of operation. This report uses such assessment though in the opinion of the consultant, it should be secondary to strategic considerations. As shown on page 79, even a 45 000 tonne per year plant can show an acceptable return, but in the end, it is whether the project has a comparative advantage, an edge, that is not readily eroded or influenced by short term market influences. For  this project the main source of competitive advantage is propylene - the raw material feedstock from the Kwinana refinery. Distance from alternative markets for propylene has created a significant raw material cost advantage for the manufacture of acrylic acid. As shown on page 64, the advantage from access to competitively priced propylene does not compensate for the small local market and scale until the plant has a scale of around 70 000 tonnes per year. Given the small domestic market, the ability of the operators to support overseas sales is therefore very important.

1

Sample graph - the sources of comparative advantage.

Plant

ownership and scale

Many

Australian companies with superior goods or services are often compelled to compete on price as superior performance is often difficult to promote and a substantial market presence is required to enter overseas markets. This, and difficult technology, suggest a joint venturer be sought with expertise in the manufacture and sale of acrylic acid and if with an interest in a WA manufacturing facility, in acrylic flocculants and viscosity modifiers. Apart from expanding export sales, it would reduce the risk of  capacity underutilisation justifying a larger and more competitive production facility. The discussion on strategy on page 60 is relevant. Enlarging the home market also helps the viability and support larger scale manufacture.

Other acrylic acid applications 2

Sample graph - the sources of comparative advantage.

Plant

ownership and scale

Many

Australian companies with superior goods or services are often compelled to compete on price as superior performance is often difficult to promote and a substantial market presence is required to enter overseas markets. This, and difficult technology, suggest a joint venturer be sought with expertise in the manufacture and sale of acrylic acid and if with an interest in a WA manufacturing facility, in acrylic flocculants and viscosity modifiers. Apart from expanding export sales, it would reduce the risk of  capacity underutilisation justifying a larger and more competitive production facility. The discussion on strategy on page 60 is relevant. Enlarging the home market also helps the viability and support larger scale manufacture.

Other acrylic acid applications 2

The

home market could be widened by producing new acrylic acid derivatives. Australia presently uses only about four thousand tonnes of acrylic acid per year to manufacture viscosity modifiers and liquid flocculants directly importing more than five-times that amount in other acrylic acid products. Two products that could be considered for  manufacture in WA are polyacrylic acid and acrylic esters. Polyacrylic

acid

Superabsorbent containing diapers have been commercially produced overseas since 1986 using polyacrylic acid. Australia imports about 4 000 tonnes of acrylic acid as superabsorbent per year valued at about $16m. Industry sources predict that by year  2000, the Australian market will double to at least 8 000 tonnes as acrylic acid (valued at $32m per year at current prices - see also pages 30 and 36) .  Another application is the water soluble form of polyacrylic acid used as a replacement for phosphates in surfactant preparations. Given an interest in zeolite production in WA, often used to complement polyacrylic acids in surfactants, the manufacture of  polyacrylic acid, (in close co-operation or equity with a surfactant manufacturer), should be reviewed (see also pages 30 and 36)

Acrylic esters (acrylates)  Australia imports about 14 000 tonnes per year of ethyl acrylate (plus a small amount of  other acrylic esters, see page 58) used by companies such as Rohm and Haas and  Albright and Wilson in Victoria to produce emulsions for surface treatment preparations. Made from about 8 000 tonnes of acrylic acid, the feasibility of manufacturing ethyl acrylate, for at least import replacement could be reviewed. The absence of a local manufacturer of required ethanol and distance from markets (and no import tariff unlike for the prepared emulsion or solution) would suggest acrylic acid ester manufacturing in WA to be a marginal activity though worthy of further review. Acrylates are further  discussed on page 52.

Local supply of acrylic acid Though

there are advantages to the acrylic acid-using industry in having a local manufacturer of acrylic acid, these have to be qualified.

Distribution cost savings   Access to competitively priced acrylic acid would obviously help the local acrylic acidusing industry. A local supplier avoids international freight costs but the acrylic acid plant would be required to sell over 90 per cent of its production to distant markets. As 3

shown on page 64, the freight equation is unfavourable unless at least one-third of  acrylic acid production is supplied to the local market. Competitively priced propylene offsets the freight imbalance and for operating at a smaller scale than some competing plants.

Access to marginally priced acrylic acid The

benefit of a local supply of acrylic acid has to be considered against the fact that West Australian flocculant and viscosity modifier industry has until recently acquired acrylic acid at prices well below those ruling in the home markets of the acrylic acid manufacturers.These low prices have been particularly helpful to their competitiveness especially as some (if not most) overseas competitors may not have had access to such low prices. This is supported by Figure 14 (page 58) and supporting text. However, if an acrylic acid manufacturing plant had operated in WA, it could claim to have been 'injured' by those low-priced imports and appeal for remedy to Australia's anti-dumping administration.   Anti-dumping duties by inflating raw material costs, would have two effects in the market. The primary effect raises raw material prices and by that reducing the incentive to export. The other effect would be evident if one of the suppliers assumed an interest in the acrylic acid plant. In such case with its Australian competitors paying consequently higher prices for acrylic acid raw material (whether imported or local), its increased competitiveness could help its market share or profitability. Confirming industry assessments, the extreme circumstances that promoted a world production overcapacity may not re-occur in the short to intermediate term. However it serves to stress the dependent link between the supplier and the user that should be quantified in the more comprehensive feasibility study. As shown by industries such as the synthetic resin sector, there is often a close working relationship with raw material suppliers where technical support and other measures are provided to help the local user industry.

Assumptions This

report has assumed:  An exchange rate of US$0.75 equal to A$1.00:  A construction date of 1998: Product prices based in early 1995 US contract prices: Propylene and gasoline prices related to Singapore spot prices early 1995. The anticipated cost of crude propylene from the BP refinery has been derived from this benchmark: Utility, construction and employment costs as detailed on page 101. For example capital costs have been escalated by a factor of 1.05 for the US cost of capital: and 4

 A vapour phase propylene oxidation process to produce one grade of glacial acrylic acid from 'chemical-grade' propylene (95 per cent).

Acrylic acid - the chemical Chemistry Commercial scale synthesis of acrylic acid began in the 1930s and has grown to a world market in excess of two million tonnes per year.   Acrylic acid (CH2=CHCO2H), less commonly referred to as propenoic acid, is a colourless, slightly water soluble carboxylic acid with an acrid odour, a melting point of  13.5C, a boiling point of 141C and relative density of 1.06. The acid may be transported stabilised with inhibitors (such as hydroquinone derivatives) to prevent polymerisation. Functionally acrylic acid may be regarded as a derivative of ethylene in which one hydrogen atom has been replaced with a carboxyl group (though this is not the basis of  its synthesis).

Applications   Acrylic acid is a versatile chemical that can be esterified, aminated or otherwise modified and polymerised to complex molecular arrangements to suit requirements. This characteristic enables a broad range of reactions for providing performance characteristics to a range of polymers. The esters are produced by reacting acrylic acid with alcohols especially ethanol, methanol and butanol that may be saponified, converted to other esters or amides by aminolysis.   Acrylates are derivatives of acrylic acid (such as methyl and ethyl acrylate) whose properties have been sufficiently modified to enable of acrylic acid to be used in different media as emulsion and solution polymers. As emulsions, these products may be used as coatings, finishes and binders leading to applications in paints, adhesives, and polishes with solutions used for industrial coatings. Two-third of the world's production of acrylic acid is used to produce acrylic esters (acrylates) primarily for use in emulsions and solution polymers for latex-based paints, coatings, adhesives and textiles. Polymers of acrylic acid can be produced as superabsorbent materials, and soluble as a replacement for phosphates in detergents. Both of these represent fast growing applications for acrylic acid.

5

The

chemical and physical properties of the polymers can be modified through controlled variation in the selection and balance of the monomers, the extent of crosslinking and molecular mass. This flexibility is complemented by high resistance to chemical and environmental degradation, strength, clarity, and being readily available in high purity forms.

Storage

and transport

  Acrylic acid is highly corrosive to many metals and must be stored in stainless steel, glass, aluminium or polyethylene lined equipment. It is commonly supplied in 200kg plastic drums.  Acrylic acid must be used within about three months of manufacture as it degrades by polymerisation by at least 0.5 per cent per month - even faster if not held in a narrow temperature range during transport and storage. This instability requires more frequent and hence costly turnover of inventories especially for users in WA relying on more distant suppliers.

Acrylic acid & acrylates - manufacture Acrylic acid   Acrylic acid is manufactured from propylene in two steps via acrolein in a gas phase using special catalysts. CH2=CHCH3 (propylene) + O2 CH2=CHCHO (acrolein) + H2O CH2=CHCHO + 1/2 O2 CH2=CHCO2H (acrylic acid) Conversion rates of up to 90 per cent are achievable at commercial scales of production depending on the technology, catalysts and conditions. Typical

process inputs per kilogram of acrylic acid produced (ie. at 90 per cent efficiency) are: Propylene 0.63 kg Natural gas 0.23 M j Ethyl acetate 0.01 kg Minor 

Catalyst 0.0003 kg 6

Hydroquinone 0.002 kg  Air provides the oxygen. Therefore

at a typical 90 per cent efficiency, one tonne of propane/propylene produces 1.5 tonnes of acrylic acid.

Catalysts and process Though

just an oxidation process, the limited life of the catalyst has promoted a two stage manufacturing process via acrolein using two catalysts. The first stage is the oxidation of propylene to acrolein using a bismuth molybdate catalyst in a strongly exothermic reaction (at about 370C). In the second stage, the acrolein gas is passed over a molybdenum vanadium oxide catalyst that is also exothermic (at about 270C - about 100C cooler than the first stage). The crude acrylic acid is cooled to about 80C, absorbed in water (30 to 60 per cent concentration) and then extracted with organic solvent or water (depending on the concentration). Acrylic acid is either purified by distillation from the solvent or removed from water with added inhibitors to minimise the formation of polymers.  A technical grade of acrylic acid may be produced by a simple distillation to produce a grade of acid suitable for the manufacture of acrylic esters, but unsuitable for  polymerisation. For esters, whose manufacture is normally integrated with an acrylic acid plant, the purification step is undertaken after the esterification process. The technical grade of the acid is therefore not traded (or imported into Australia).   A high purity form (often referred to as glacial  acrylic acid) is produced by a second distillation or crystallisation that reduces aldehyde impurities (especially furfural) which inhibit polymerisation. Different grades of glacial acrylic acid are available with flocculants requiring higher purity levels than dispersants and some other applications. Technology Though

all based on the same principle, there are different catalysts, conditions and systems to produce acrylic acid with variation in production efficiencies and the quality of finished product. The selection must therefore consider that a high grade of acrylic acid is often used in WA. There is only limited technology available to produce acrylic acid. Most manufacturing plants use the Japanese Nippon Shokubai process (including Rohm and Haas) and another licensor is Mitsubishi Yuka. BASF however, the largest scale manufacturer of acrylic acid and esters, does not release its technology. It is worth noting that technical difficulties have been reported as for example during 1995, Idemetsu Petrochemical Company, and the Sumitomo Chemical Company failed to operate above two-thirds capacity after adding to plant capacity. 7

Propylene

raw material

Propylene is now the only feedstock used in plants installed since 1970. The BASF plant at Ludwigshafen Germany was the last acetylene-based acrylic acid plant to close in 1994. The process of acrylic acid manufacture from propylene is described page 16. The

manufacture of acrylic acid is less sensitive to the cost of raw materials than many other petrochemicals. For example, for semi-purified (ie. technical grade) acrylic acid (as used for the production of esters), propylene represents about 90 per cent of input material costs but only about 35 per cent of production costs. That ratio is even lower  for the glacial form. It is therefore important to note, (and detracting from the appeal of  potentially cheap propylene in WA), that the low significance of raw materials means competitiveness is more sensitive to construction costs than most commodity petrochemicals.

Sources Though

acrylic acid is now only made from propylene, it can be produced from methane, acetylene or ethylene by a carbonylation process using carbon monoxide. With varying processess, even one beginning with glucose via lactic acid, all are higher  cost than starting with propylene. With new technology, ethylene represents the most competitive alternative to propylene for the manufacture of acrylic acid. All assessments however indicate propylene will trade at about 80 per cent of the price of ethylene for several decades, having ranged between 70 and 85 per cent. As ethylene, like other competing hydrocarbon feedstocks, requires more complex technology (involving a carbonylation step) it has to be at a discount to propylene to be competitive. This status is unlikely to occur in WA.   Acrylic acid plants can use chemical-grade of propylene that is typically 95 per cent propylene while polymer-grade (99.5 per cent propylene) is reserved for the manufacture of polypropylene and its co-polymers. Propylene is produced as a by-product in naphtha crackers and petroleum refineries, and by the dehydrogenation of propane.

By-product In Australia, propylene is produced exclusively as polymer-grade for the manufacture of  polypropylene synthetic resin from a naphtha cracker at ICI Botany, New South Wales and a gas-oil cracker at the petrochemical complex at Altona, Victoria operated by Kemcor for use by Hoechst. The Shell oil Scales of manufacture range from about 2 000 tpa (Japan) to 300 000 tpa (Rohm and Haas, Deer Park USA). Those producing more than 15 000 tpa of esters also manufacture the required technical refineries at Clyde, New South Wales and Geelong, 8

Victoria also use propylene to produce polypropylene polymers. Other Australian refineries, like at Kwinana, convert propylene to gasoline. There is no coastal trade in propylene though the announced conversion of the ICI petrochemical plant to gas from South Australia, with an installed polypropylene unit, may see its movement from  Altona, Victoria or other refineries. Clearly the price of propylene will be determined by international competition adjusted for freight and its opportunity value (that may be assumed to be for polypropylene synthetic resin). Given uncertainty about the intentions of ICI and Hoechst, and reserve production capacity at the Shell plants, a best estimate is that propylene will be transacted at the international price plus the cost of freight.

Dehydrogenation of propane The

other source of propylene is from propane by a process called dehydrogenation. As a generalisation, propane is an uneconomic source unless its price is less than onethird that of propylene with local economics enabling propane dehydrogenation units at such locations as Mexico and Venezuela. Price

During early 1995, the price of propylene in the USA reached US$539 per tonne (about US24 cents per pound contract with a spot price of US28 cents) while the price of  propane (as the alternative source) reached about US$178 per tonne (when naphtha, as its principal source was US$180 per tonne). Propylene prices are also discussed on page 79.

World trade Much

of the recent growing world demand for propylene by the chemical sector, predominantly supplied by naphtha crackers, is met by oil refineries. The refineries presently supply about 80 per cent of production potential, with the balance like at the Kwinana refinery reformed to fuel. Both chemical-grade (95 per cent propylene) and the higher valued polymer-grade (99.5 per cent propylene) is traded, especially in Asia. Regional propylene production imbalances are increasing so that world trade, currently about 800 000 tonnes per year, is projected to increase to 1 million tonnes by year  2000. Europe is projected to import 500 000 tonnes per year, with a deficit in Asia by 1998. The USA will remain the dominant, and most competitive exporter of propylene with prices about 10 per cent lower than Japan and Asia, and at least 5 per cent lower  than Europe. Demand for propylene is projected to grow at 3.2 per cent per year compared with ethylene at 2.1 per cent. The growth, though well below the 5 to 7 per cent experienced in the mid 1980s, is being driven by the firm demand for propylene's main uses, namely polypropylene synthetic resin and propylene oxide. 9

Propylene

in WA

There

are two potential sources of propylene in WA, from the oil refinery and from North West gas. From

BP Refinery

BP Refinery (Kwinana) produces about 60 000 tonnes of propylene. It is produced as a mixed LPG stream from their cracker containing approximately 65 to 70 per cent propylene with most of the remainder being saturated propane "plus a few per cent of  C2 and C4 products and traces of other hydrocarbons" that are converted to gasoline in their catalytic polymeriser. The refinery is anticipated to increase propylene production to 70 000 tonnes by 1998 and, according to BP production could be further increased by between 5 and 20 per cent. The

value of propylene to BP is therefore between its current value to produce gasoline (less the cost of production in a catalytic polymeriser installed 1986), and its value as chemical or polymer-grade propylene (less the substantial cost of preparing and transporting this gas to markets). Potential

from propane

Though

producing propylene from propane is generally uneconomic, it raises the consideration of producing it from LNG at the Burrup Peninsula (where an 800 000 tpa LPG extraction plant has been installed). Increasing domestic gas use, including for the developing direct reduced iron projects and the goldfields gas line under construction, could provide additional or complementary sources. Its production would not be at competitive scale without another on site application for propylene such as for the manufacture of polypropylene synthetic resin or propylene oxide. The manufacture of  acrylic acid in the north west of WA would then become a secondary activity. It would also be more expensive to construct and operate than at Kwinana with its competitive refinery-sourced propylene, existing infrastructure, markets and lower construction and operating costs. In other words, an acrylic acid plant would normally only be assessed after establishing the viability of a larger user for propylene.

Conclusion Though

propylene is more expensive in Japan and Asia, transport cost savings and large scale production units have justified acrylic acid industries near their markets. Therefore in contrast to Asian and European suppliers that rely on scale and market proximity, the primary source of competitiveness for an acrylic acid plant in WA would be cheap propylene providing prospects for offsetting its operating scale penalty and freight costs to reach markets. The significance of propylene on the plant's competitiveness is detailed page 64.

10

The

BP refinery may be reasonably anticipated to negotiate the supply of propylene at substantially lower prices than negotiated by refineries located nearer major  petrochemical centres. This status underpins the viability of the acrylic acid plant and analysis has been undertaken by Fluor Daniel indicates a price of around A$235 (as crude propylene, see page 79) could be anticipated. This deduced price would be significantly below that anticipated to be available to competing acrylic acid plants. The benefit is illustrated by Figure 20.

Esters

(acrylates)

  Australia imports about 14 000 tonnes of ethyl acrylate and smaller amounts of other  esters as shown in Figure 15. Expressed as component acrylic acid, some 12 000 tpa of  acrylic acid as esters are imported suggesting potential for import replacement. It is worth noting that esters are more stable and less corrosive than acrylic acid and therefore cheaper to transport. In other words, the freight advantage is somewhat less for esters than the acid. Furthermore there is also the question of the availability of  competitive alcohol raw material.

Industry grade of acrylic acid - a grade which is not nornally traded. World production is about 1.7M tonnes approximately equally divided between Asia, Europe and North America.

Manufacture   Acrylic esters such as methyl, ethyl, butyl and 2-ethylhexyl acrylates are made from technical-grade acrylic acid. Ethyl and methyl acrylates are manufactured on a continuous basis by passing acrylic acid and a small excess of the alcohol in a reactor bed at elevated temperature extracted at a yield of about 90 to 95 per cent. The ethylhexyl and other esters are produced on a batch basis reflecting smaller markets, (sometimes even produced by transesterification from ethyl acrylate).  Acrylic esters may be polymerised, catalysed by heat and oxidising agents in solution or  emulsion methods to form long-chain thermoplastic resins. Broadly, acrylic ester  polymers are colourless, insoluble in aliphatic hydrocarbons and resistant to alkali, mineral oils and water so that with good resistance to degradation, adhesion and electrical properties, they are widely used.

Character  Polymers of methyl methacrylate and other esters with alkyl side chains are hard brittle solids while straight chain esters are soft and flexible. By co-polymerisation different 11

acrylic esters, polymers with the desired hardness and flexibility may be produced. These esters (often using acrylic acid) can be co-polymerised with other unsaturated compounds such as styrene, vinyl toluene or vinyl chloride to provide other useful products. Introducing reactive groups along the polymer chain produces more complex acrylic esters that can be cross-linked with other groups to produce epoxy, amino and carboxyl derivatives. They may be further modified for specific applications and manners of use such as surface coatings that are curable by ultra violet light. Extensive research is applied to acrylic chemistry and with a very broad range of  alternative processes, this activity has become specialised with patents and proprietary knowledge. There are now more manufacturers of specialty acrylic esters (that do not themselves manufacture acrylic acid) than there are manufacturers of the acid. The esters are generally produced near major traditional markets and suppliers of acrylic acid.

Applications   Acrylic esters may also be used in solutions and emulsions; the ethyl ester is used in water-based paints and binders in non-woven fabrics; methyl ester as the copolymer  component of acrylic fibres; the butyl esters in water-based paints and adhesives; and the 2-ethylhexyl ester, used like the butyl ester as well as for stick-on labels and sealants. Co-polymers and blends of methyl methacrylate, butyl acrylate and ethyl hexyl acrylate are used in acrylic gloss paints where the acrylates typically represent between 20 and 30 per cent (dry basis) of the formulation. These are imported into Australia for  the preparation of solutions and emulsions for paint manufacturers as undertaken in Victoria by Rohm and Haas and Albright & Wilson for use as surface coatings for  buildings, paints and textile industries. Produced in batch processes, the normal concentration of acrylate in the emulsion or  solution is in the range of 30 to 60 per cent. Emulsions are produced near markets to avoid the cost of freighting the liquid medium and, being unstable, to minimise the risks of sediments, skins or other changes in form. The production of ester emulsions in WA is nevertheless not precluded, though reflecting the disposition of Australia's paint industry, probably a marginal activity with freight costs weighing heavily against any possible offsetting raw material advantage.

Conclusion With plants around the world down to below the size of the Australia market, the manufacture of ethyl acrylate associated with an acrylic acid plant could be considered in the more comprehensive feasibility study. Again it will be influenced by the availability of competitively priced ethanol.

Manufacture of related acrylic products 12

Acrylonitrile  Acrylonitrile is included in this report as it can be used to manufacture acrylic acid and is commercially used to produce acrylamide. Acrylamide is imported by WA's flocculant and viscosity modifier manufacturers (see next page) where it represents about 20 per  cent by value of raw material inputs (comparable to acrylic acid). The

technology to produce acrylonitrile is dominated by BP Chemicals based on the Sohio process that reacts propylene with ammonia and oxygen. CH2=CHCH3 (propylene) + 3/2O2 + NH3 CH2=CHCN (acrylonitrile) + 3H20 Major

manufacturers of acrylonitrile include BP America (350 000 tpa), Cytec Industries (210 000 tpa) and Sterling Chemicals (330 000 tpa) with producers in Europe and Asia at scales of plant ranging down to just 30 000 tpa. Reflecting the high cost of transport (and being hazardous), acrylonitrile is normally manufactured where it is primarily required sometimes justifying smaller plants in more isolated markets. It is relevant to note that Australia imports about 6 000 tpa acrylonitrile for the manufacture of ABS and SAN synthetic resins by Huntsman Chemicals (at their West Footscray and Dandenong sites in Victoria). To

manufacture acrylic acid

 Acrylonitrile can be used to produce acrylic acid by hydrolysis, producing large amounts of sulfuric acid and ammonium sulfate by-products. Though these by-products can be recycled and with production efficiencies comparable to the direct oxidation of  propylene, the process is nevertheless generally uncompetitive.   A variant is the small scale manufacture by Allied Colloids of acrylamide (see next page) from acrylonitrile reacting the acrylamide sulfate intermediate with alcohols to produce acrylic esters. Worldwide, about 53 per cent of acrylonitrile production is used for acrylic fibre, 30 per  cent for ABS/SAN synthetic resin with the balance of 17 per cent used for other  applications including the manufacture of nitrile rubber and polyacrylonitrile. Clearly the absence of a local market for acrylonitrile (including for acrylamide, see next) precludes its consideration for manufacture in WA.

Acrylamide WA's two flocculant manufacturers import about 1 500 tonnes of acrylamide per year  valued at $3m, (ie. about $2 per kg).

13

In Australia, acrylamide is used with glacial acrylic acid to manufacture flocculants and viscosity modifiers, especially the powder form. Acrylamide is manufactured simply by hydrating acrylonitrile using water and sulfuric acid (with the most expensive part being its recovery from the reaction mixture). Transport costs require the location of  acrylamide plants where the acrylonitrile is produced.   Acrylamide is most commonly transacted as a 50 per cent solution with the freight penalty offset by the avoided cost of drying. However being more isolated from major  suppliers, Australian companies import acrylamide in the costly dry form, dissolving it in water prior to use. Australian users would clearly benefit from its local manufacture but, contingent on acrylonitrile production, this prospect is clearly unlikely.

Acetic acid  Acetic acid is co-produced with acrylic acid generally representing about 5 per cent by mass or 2 per cent by value of total production. Acetic acid is removed in the distillation process and may be sold for industrial purposes. In the USA, typical of other major industrialised regions, applications for acetic acid are, vinyl acetate monomer (42 per cent), acetic anhydride (18 per cent), solvents (16 per  cent), terephthalic acid (5 per cent) and other purposes (19 per cent). There are no comparable applications for acetic acid in Australia with most used for food and industrial uses. Australia imports about 3 500 tonnes valued at $3.3m (imports into WA are not recorded by ABS but are believed to be less than 300 tonnes).   Acetic acid is a common industrial acid generally produced by the carbonylation of  methanol using technology owned by Hoechst, Celanese and BP Chemicals. Other  technologies are under development that begin with ethane or methane. Manufacturing

plants range in scale from 5 000 tpa to 700 000 tpa with most about 300 000 tpa. Industry production capacity is estimated for the USA at about 2.2 Mtpa, in Western Europe at 1.3Mtpa and in the Asia Pacific region about 1.5 Mtpa. The

current value of acetic acid in the USA is about US$500 per tonne (with spot prices about US$800 per tonne). Imports to Australia are valued at about A$900 per tonne FOB.  An import tariff of 8 per cent applies, phasing down to 5 per cent by 1996. All imports are under a Tariff Concession Order that could be revoked by application of an  Australian-based manufacturer inflating the price in Australia by about A$45 per tonne. Therefore,

with an acrylic acid plant producing one tonne of acetic acid for every 20 tonnes of acrylic acid produced, at a scale of say 60 000 tonnes of acrylic acid per year, about 3 000 tonnes of acetic acid would be available. Refined acetic acid would therefore be worth about $3m per year. 14

One possible application for acetic acid is the manufacture of cellulose acetate synthetic resin using waste cellulose (say straw). Though there is a small Australian market and an import tariff, its production at small scale is clearly uneconomic. Cellulose acetate is generally manufactured in regions with a supply of cheap cellulose (bagasse, grain straw etc.) and a large market for the resin and acetic acid. Countries such as China, that meet those criteria, have therefore also become very competitive exporters of this resin. With only a limited market in WA, this mildly corrosive acid could be railed to other  parts of Australia taking advantage of import tariff and international freight costs savings to defray intra-state transport costs (helped by backloading rates often available from WA).

Polyacrylic The

acid

markets for polyacrylic acids are described on page 36.

Broadly, polyacrylic acid may be water soluble (molecular mass in range of 2 000 to 5 000), or insoluble being of higher molecular mass and or cross-linked. The two major  uses are as superabsorbents and for water treatment and surfactants. Superabsorbents

Cross-linked poly sodium acrylate is used as superabsorbent materials especially diapers and sometimes as agricultural mulches. The major manufacturers are Allied Colloids, Arakawa, Chemishe Fabrik Stockhausen, Dow Chemical, Nippon Shokubai K. K., Sanyo Chemical Industries and Seitetsu K. K. K. The technology is tightly held though licensing arrangements are available (as undertaken by Nalco in the USA). The

superabsorbent polymer is made from a 30 to 40 per cent aqueous monomer  mixture of sodium acrylate and acrylic acid, with initiators and additives. Control of  conditions are important to achieve appropriate polymerisation to minimise excessive cross-linking. The product as used in disposable diapers is supplied as moderately dense granules.

Dispersant/surfactant use. Water soluble forms of polyacrylates are used as scale inhibitors, dispersants in cooling water, pigments and paper coating materials. Homo- and co-polymers of acrylic acid and methacrylic acid and mixtures (with up to 10 per cent alkyl acrylate co-monomers) are very effective as anti-redeposition agents in detergent formulations. The process of  manufacture is proprietary and undertaken by manufacturers such as Allied Colloids, Colloids Inc. and Rohm and Haas.

World - acrylic acid industry 15

Production

scale

World acrylic acid production capacity is estimated at 2.8 million tonnes per year, divided between the Americas (0.9 million tonnes), Asia (0.7 million tonnes) and Europe (1.0 million tonnes). There is no manufacturing facility in Australia or New Zealand. The

following table outlines the major acrylic acid producing centres.

Location Operator Scale (tonnes pa) Germany BASF 430 000 (three units) (Ludwigshafen) Belgium (Antwerp) BASF 270 000 Germany (Marl) Hüls 60 000 Aktiengesellschaft Czech Republic Sokolov Chemical 25 000 (being doubled to 50 000) Works France (Carling) Elf Atochem 220 000 UK (Bradford) Allied Colloids 15 000 (acrylonitrile hydrolysis) Japan (Kawasaki) Ashahi Chemical 18 000 (acrylonitrile hydrolysis) Japan (Aichi) Idemetsu Petrochem 80 000 Japan (Yokkaichi) Misubishi Yuka 110 000 Japan (Hmeji Hyogo) Nippon Shokubai 210 000 Japan (Oita) Oita Chemical 60 000 Japan (Niihama) Sumitomo Chemical 80 000 Korea (Naju) Lucky Ltd 65 000 Taiwan (Linyuan City) Formosa Plastics 65 000 (expanding to 120 000) USA (Freeport) BASF 150 000 (doubling by 1996 to 300 000) USA (Deer Park) Rohm and Haas 400 000 USA (Clear Lake) Hoechst Celanese 200 000 (increasing to 275 000 in 1998) USA (Taft) Union Carbide 95 000 China (Shanghai) Gao-Qiao 30 000 Various: Brazil, Various Oxitena, 25 000 to 70 000 Mexico etc Oxiquimica Celanese

16

Mexicana Petroleos Mexicanas etc.

The

table indicates a range of production capacities from 25 000 tpa to around 400 000 tpa with a mean size of around 100 000 tonnes. A 70 000 tpa scale being considered for  WA would therefore be near the the middle of the range.

Capacity utilisation In 1992, coinciding with a trough in prices (see Figure 8), world acrylic acid capacity utilisation fell to about 65 per cent. Significantly, whilst the USA and Europe export only between 5 and 7 per cent of their installed capacity, Japan had been exporting up to about 20 per cent. In other words, with substantial capacity underutilisation and a local market representing only about 60 per cent of installed capacity, Japan by necessity has become a very competitive supplier to world markets despite their raw material disadvantage (see page 19). Trade data show Japan became the dominant supplier to  Australia at prices well below those within Japan (page 49). Three

years later in 1995, even with plant expansions, utilisation rates rose substantially with the USA at 90 per cent, Japan 80 per cent and Europe 90 per cent.

Performance The

acrylic acid industry is highly competitive as signalled by substantial investments and aggressive pricing. For example Rohm and Haas, one of the largest manufacturers deriving half its income from acrylics, has since 1983 experienced returns on shareholders' funds falling to one-half. Over the past three years, their employment has been reduced by 10 per cent while increasing production by 30 per cent.

Markets Broadly, the market for acrylic acid may be divided into two sectors (with significance in the USA in brackets): Polymers of acrylic acid (about 35 per cent): and Esters and compound polymers of acrylic acid (65 per cent). Though overall growth in the 1990s has slowed from previous years, some applications for acrylic acid have been growing rapidly especially polyacrylates, for detergents (to replace phosphates) and for superabsorbent materials (such as disposable diapers). These new fast growing applications have increased world demand for acrylic acid by about 6 per cent per year with similar growth projected beyond year 2000. Acrylic esters on the other hand are projected to grow at only about half that rate at 3 per cent per  year. Whereas during the early 1980s nearly all acrylic acid was used as a lower technical grade to produce acrylic esters, typically about one-quarter of world production today is 17

sold as the high purity glacial form. This major shift reflects faster growing demand for  polyacrylates in the superabsorbent polymers, detergents and for water treatment compared to the now more mature and slower growing markets for acrylic esters.   Again as elsewhere, there are substantial variations between regions such as Government regulations in some countries imposed on the sale and use of preparations containing volatile organic compounds (VOCs) promoting water-based preparations for  coatings, adhesives and sealants that often use acrylic esters. Figure 3 summarises the applications for acrylic acid in the USA with indicative growth shown in Figure 4. It is important to note that size and growth rates vary substantially between countries. For example, in newly industrialised countries, acrylics for textiles and superabsorbents for disposable diapers are growing faster. In Australia there is little demand for acrylates for surfactants as there is (currently) little concern about detergent phosphates in waterways for which they substitute. For Australia, the important issues for intending manufacturers are market size and comparative advantage.

World market - acrylic acid polymers Polymers of acrylic acid (polyacrylic acid and salts) represent about 35 per cent of  applications for acrylic acid in the USA compared to about 20 per cent in Australia (see page 41). These are made by polymerising glacial acrylic acid under proprietary conditions. The two principal applications are as superabsorbents and in surfactants as a phosphate replacement.

Superabsorbents Polyacrylic acid is manufactured for use as superabsorbent for disposable diapers and soil mulches representing about 70 per cent of polyacrylic acid applications (ie. 25 per  cent of the market for acrylic acid). Growing at 6 per cent per year, polyacrylates are projected to represent 37 per cent of the world market for acrylic acid by year 2000. The

Australian market in 1995 is estimated at 4 000 tonnes of acrylic acid as polyacrylic acid valued at about $16m growing at about 8 per cent per year.

Dispersant/surfactants Polymers of acrylic acid can be designed to replace phosphates in surfactants especially in liquid forms sometimes in combination with zeolites as in parts of Asia and the USA. These polyacrylates represent about 8 per cent of the US market for acrylic acid with world growth at about 10 per cent. There is presently little demand in Australia for this form of acrylate. 18

Flocculants Polyacrylic acid can be designed for use as flocculating agents for water treatment. In the USA they represent about 5 per cent of the market for acrylic acid in a sector  growing at about 4 per cent per year. The Australian market is described page 41.

World market - acrylic esters & polymers  Acrylic esters and derivatives represent about 65 per cent of the market for acrylic acid in the USA, slightly higher than in Australia, (see Figure 5 for WA).  Acrylates are used in a broad range of applications directly as a resin, or as solution or  emulsion. The following provides an indication of typical applications with the market share expressed as a percentage of all acrylic acid applications as acrylic acid (ie. including the previously described polyacrylic acids). Figure 3, page 35 is a graphical representation.

Surface

coatings

Surface coatings, such as paints, represent the largest application for acrylic esters at about 19 per cent of the market. Demand, that was motivated by the convenience of  water-based paints especially the superior acrylic-based emulsions, is now being driven by regulations and interests to reduce atmospheric release of volatile organic compounds (VOCs) used as solvents in traditional (alkyd-based) surface coatings. This sector is growing at 3 to 5 per cent per year with faster growth for newer more sophisticated applications (such as UV radiation-curable polymers). The

Australian surface coating industry is dominated by ICI Australia, Wattyl and Taubmans using emulsions made by companies such as Rohm and Haas and BASF from imported ethyl and other acrylic esters. The paint industry in Australia, like in other  developed countries, is growing at about 2 per cent per year.

Adhesives and sealants  Adhesives and sealants are the second largest application for a broad range of esters that represents about 15 per cent of acrylic acid applications. Though this sector is closely related to the variable and slower growing construction sector, like the surface coating sector it has been stimulated by concerns about VOCs. This sector has been growing at 4 to 6 per cent per year in most markets and faster in Asian textile-producing regions with growing construction sectors. In Australia, this sector is dominated by Selleys owned by ICI which imports most functional specialised ingredients. 19

Textiles Textiles

represent about 11 per cent of the market for acrylic esters in the USA of which about 90 per cent is used as emulsions for use in non-woven fabrics and textile treatment, and only 10 per cent for textile fibres. Growth in the USA has been about 2 per cent but substantially faster in some Asian countries.   Australia's small textile industry uses solutions or emulsions prepared from imported esters by companies such as Rohm and Haas and BASF.

Plastic

forms and sheet

  A range of acrylic esters are used to produce plastic forms and sheets representing about 8 per cent of the market that is growing at about 3 per cent.  According to industry estimates, about 15 000 tonnes of such acrylic ester products are imported and manufactured in Australia.

Paper

treatment

The

use of recycled and higher quality papers and wall paper has increased demand for  acrylic ester emulsions. Representing about 3 per cent of the market, these chemicals are growing at about 2 per cent per year.

Flocculants   A range of acrylic compound polymers are prepared for use in oil drilling, mineral processing and water treatment. They represent about 2 per cent of the USA market (some 15 per cent in Australia taken with viscosity modifiers). This sector is growing at about 2 per cent per year.

Other acrylic acid applications   Acrylic acid esters are used in a range of other applications including as modifiers for  synthetic resins and emulsions and solutions for leather finishes and binders. Collectively this sector represents about 7 per cent of the market for acrylic acid, with growth about 2 to 3 per cent per year.

Acrylic acid - Australia  Australia imports about 3 500 to 4 000 tonnes of acrylic acid which is exclusively used to manufacture viscosity modifiers and flocculants (see page 44). It also imports other  acrylic derivative and related acrylic products including; 20

acrylonitrile (see page 27); acrylamides for flocculants and viscosity modifiers (see page 28); acrylic esters (see Figure 15); and superabsorbents, acrylic chemicals and a wide range of items, articles and preparations. Figure 5 is a representation of imports of acrylic acid and acrylic acid-derived products expressed as tonnes of acrylic acid for 1994-95 (excluding specialised acrylic chemical preparations such as adhesives, sealants and surface treatments). It therefore includes acrylic acid imported for use by WA industry and competing imports of flocculants and viscosity modifiers. A total of 23 500 tonnes of acrylic acid and acrylic acid products is imported which therefore represents the theoretical potential import replacement market for acrylic acid. It could be usefully compared with Figure 3 for the US market that shows a different distribution of applications for acrylic acid. Projection year 2000 for Australia

By year 2000, superabsorbents will overtake flocculants and viscosity modifiers as the largest acrylic acid user produced from 8 000 tonnes of acrylic acid (see also page 36). The ester market growing at 3 per cent per year. Though the overall market for flocculants and viscosity modifiers is increasing by around 2 to 3 per cent per year, all that growth is taken up by the powder form growing at 5 per cent per year (in other words there is no growth in the market for  liquid forms). Based on these projections, the following table projects acrylic acid-using applications in year 2000 summarised as Figure 6. It shows superabsorbents estimated to represent about one-quarter of acrylic acid applications, greater than viscosity modifiers and flocculants.

Acrylic acid use - WA  Acrylic acid is imported and used exclusively in Western Australia for the manufacture of flocculants and viscosity modifiers - mineral processing aids (sometimes classified as specialised surfactant chemicals). There

are two manufacturers in WA; Ondeo Nalco - a subsidiary of Exxon with manufacturing facilities around the world including at Botany, New South Wales; and Ciba Specialty Chemicals operating one plant as a division of Imdex Ltd - a publicly listed   Australian industrial company. Both WA facilities are located in Kwinana (within three kilometres of the BP oil refinery) where there is adequate industrial land, good services, gas and support infrastructure and port facilities.

Manufacture 21

Ciba Specialty Chemicals and Ondeo Nalco manufacture these processing aid chemicals from mixtures of acrylic acid, acrylamide (especially for powder forms) and other co-reagents (especially amines) with initiators, special surfactants, emulsion oils and other chemicals that determine the performance of the final product. The process polymerises acrylic acid and other raw materials in a liquid medium in batch operations using reaction vessels. Broadly, at one end of the spectrum are flocculants that are polyacrylamide nonionics and copolymers of acrylamide and acrylic acid, and on the other are viscosity modifiers made from acrylates as anionics. Considerable experience and research is required to produce the required functional characteristics often developed in close liaison with the user. The

liquid forms contain between 30 and 50 per cent active ingredients with a shelf life of only about 6 months and are more expensive to transport than powder forms. Powder forms are more difficult and costly to produce involving solution polymerisation using costly additives, with a risk of failure until dried and require special equipment and more energy to remove the liquids. However, with over 90 per cent active ingredients, powders are more efficient to transport and store with an indefinite shelf life so that they are the only source of overseas competition. In early 1995, Imdex commissioned a powder manufacturing plant while Nalco, like other suppliers to WA, imports the powder  form. Powders

and liquids

The

decision whether to produce a powder is influenced by customer preference and the higher transport costs associated with the bulkier form. Proximity to markets enables local suppliers to competitively supply the product in the higher bulk liquid form. Liquids are cheaper compared to powders though that advantage is often eroded by distribution costs at more isolated locations. Some users anticipate a growing preference to the powder form for reasons of lower  distribution costs, convenience and stability. Partly in response and reflecting its interest for increasing exports, Imdex has installed a powder plant to supply the local and   Asia/Pacific markets. Their new plant reflects a confidence in the product given that powders are inherently more expensive to produce and, with a lower freight component, more open to international competition. Access to competitive raw materials is clearly important to their success in international markets. It is probable that if powders are increasingly produced in WA, helped by access to competitive acrylic acid, they will grow by displacing the liquid forms especially at more distant locations where freight costs are significant. A local acrylic acid manufacturer  could therefore stimulate the expansion of powder manufacturing helped by the current import tariffs and freight savings.

22

Price

Users of acrylic polymers indicate the market price of flocculants and viscosity modifiers to be far less than their value to the users especially as they are employed at very low concentrations (to 0.01 per cent). The polymers reduce operating costs through better  recoveries, producing less environmentally harmful waste products and higher quality products. Their market price is therefore determined by competition between suppliers and not their value to the user. The

manufacturing process increases the raw material (ie. acrylic acid and acrylamide) value from about $3 per kg to a finished product between $5 and $6 per kg equivalent dry weight. On a dry weight basis, the liquid form is priced at a small but declining premium to the powder form reflecting customer preference and increasing competition between the suppliers of liquids and growing preference for the powder form. Import

tariff 

There

is an import tariff of 8 per cent (declining to 5 per cent by July 1996) on acrylicbased polymers. For the bulkier liquid form, international freight provides the margin of  advantage to local suppliers so that local rather than international competition determines the market clearing price. Nevertheless, competing with powders at international prices increased by the application of Australia's import tariff, the price of  liquid polymers also seems thereby partially increased (by about 3 per cent). Import tariffs directly raise the margin available to Imdex as the only Australian manufacturer of powders. The tariff is therefore particularly helpful as their powders are more exposed to overseas competition (ie. by incurring lower freight costs). Of course   Australian tariffs are irrelevant for exports to international markets (though providing a mild stimulus). In the end, import tariff provides a small advantage to the local manufacturers, somewhat more for low freight-incidence products like the powders produced by Imdex.   At a 5 per cent tariff as applicable from 1996, the benefit is a vestige of Australia's protection system, is small and perhaps best described as an offset for the fact that  Australia, unlike competing regions, provides no rebate for taxes incorporated in goods for export sale. (See also page 103 on import tariffs.) Technology

With a wide range of characteristics and a favourably high ratio of value to cost to resource developers, some companies like Alcoa encourage suppliers of viscosity modifiers and flocculants to work closely with their operations and even encourage the use of their research facilities. This level of co-operation promotes a high level of  international skills that is perceived by some to help Imdex export to Asia/Pacific 23

markets. In a sense therefore, these acrylic polymers act as a vehicle to export locally developed, internationally competitive skills.

Market focus and growth With a very broad range of mineral processes, the two West Australian manufacturers appear to be focussing their liquid products on key WA resource industries such as alumina and gold. With continuing refinements in mineral processing and by using minerals with different characteristics, users of flocculants and viscosity modifiers claim the advantage held by Australian suppliers is their ability to respond quickly to their  requirements. Their competitiveness is helped by maintaining technical support personnel that closely interact with customers.

In

a national perspective

The

Australian market for acrylic based flocculants and viscosity modifying polymers is estimated by industry sources at about $70 million per year of which 40 per cent is represented by WA at $30 million per year. The two WA manufacturers are estimated to supply about one-half of Australia's production. Other manufacturers located in the Eastern States of Australia are Allied Colloids, Henkel (Australia), BASF and Rhone Poulenc with small manufacturing facilities now supplying only about half the Australian market for the liquid form. The

Australian market is broadly evenly divided between liquid and powder forms on a dry weight basis (the liquid forms are between 30 and 50 per cent solids). Powder forms are imported and supplied by SNF (Floerger), Rhone Poulenc, Stockhausen, Cytec, and  Allied Colloids. Since 1995, Imdex has begun to manufacture powders.  As shown in Figure 13, the demand for powders has been growing at about 5 per cent per year whereas the demand for emulsions (ie. locally supplied given little or no imports) have shown little growth. Nevertheless, WA production has been growing about 16 per cent per year part due to the expansion of Imdex. The demand for locally manufactured liquid forms is indicated by the volume of imports of acrylic acid (Figure 11) used in their manufacture. The

Australian market for viscosity modifiers and flocculants is growing slowly, around 2 per cent per year because any growth in the volume of minerals processed is being offset by the use of more efficient products. The combined effect is there is no increase in the market for liquid forms which are losing market growth to the powders. Against this, WA suppliers have been substantially increasing their market share being furthered by the entry of Imdex into the faster growing powder market.

Prices

- acrylic acid 24

World Like most commodity petrochemicals, the price of glacial acrylic acid has been volatile correlating with economic activity. As an example, the list price in the USA (US currency) has ranged from 64 cents per pound in 1985, to 84 cents in 1990 falling to 68 cents in 1991 recovering to 80 cents early 1995. Industry investment too has been an influence. During the 1970s through the 1980s, world production increased around 20 per cent per  year. However from the early 1990s, and contrary to projections, growth slowed to about 4 per cent resulting in production overcapacity, especially in Japan. To minimise the penalties of underutilising installed capacity, the 1990s recession was marked by particularly aggressive price discounting especially in smaller markets like Australia. Prices also vary substantially between the major acrylic acid production centres. In early 1995, European prices were 7 per cent higher than in the USA (84 to 86 cents per  pound), and 20 per cent higher in Asia (94 to 96 cents per pound). Such differentials between regions are enabled by international freight costs and sometimes non-tariff  barriers.

Australia When acrylic acid prices in the US, Europe and Japan ranged from 64 cents (lowest contract price) to 96 cents per pound) in early 1995, the average FOB price to Australia was about A$1.80/kg - equivalent to just US60 cents per pound. Figure 7 summarises the relative price of acrylic acid during early 1995 at three sources of supply and Australia. The FOB price to Australia was below the contract price in the USA and even after including freight and distribution costs, the price delivered to the gate in Australia was still below the US list price, (and only marginally above the US home market contract price). As discussed on page 52, imports of acrylic esters supplies to Australia have also been substantially discounted. Figure 8 shows the average annual FOB prices of acrylic acid to Australia for the seven year period ending June 1995. The economic downturn beginning 1990 promoted export sales at heavily discounted levels (to minimise underutilising installed capacity). With growing demand beginning 1992, the incentive to discount reduced with prices returning to pre-recession levels. Figure 9 shows FOB import prices on a monthly basis. During the 12 months ending June 1995, prices increased some 70 per cent (with the trend continuing in subsequent months). Both price graphs indicate WA companies have negotiated more favourable prices than other Australian acrylic acid users. 25

It is relevant to note that though described as a 'glacial' grade of acrylic acid, there are different specifications and prices - the manufacture of flocculants requiring the purer  grade. It is not clear what the implications are on technology and feedstock conversion efficiency. This issue will require consideration in a more detailed feasibility study.

Acrylates There

are no manufacturers of acrylic acid and esters in Australia. However, companies such as Rohm and Haas, AC Hatrick Chemicals and BASF Australia produce a range of  polymer emulsions and products made from a range of imported acrylic acid esters. There

is no import tariff on acrylic esters, though there is a tariff of 8 per cent on polymers and preparations of acrylic acid and acrylic esters (phasing down to 5 per cent July 1995). The

average 1994-95 FOB prices to Australia, in equivalent US cents per pound, with current list and contract prices in the USA in cents per pound in brackets are as follows; Methyl

acrylate: 58 cents (82 & 66 cents); Ethyl acrylate: 55 cents (71 & 63.5 cents ); Butyl acrylate: 56 cents (73 & 66.5 cents); and Ethylhexyl acrylate: 61 cents (82 & 77 cents). Clearly, and as for acrylic acid (see page 49), acrylate prices in Australia have been well below those of the country of manufacture, typically 15 to 20 per cent below the list (and contract prices). Those marginal prices could have been used by any Australian-based manufacturer as prima facie grounds for appeal to the Anti-dumping Authority and the application of anti-dumping duties would have raised raw material prices in Australia by the amount of the discount (ie. some 15 to 20 per cent!). The

low prices of acrylic acid and acrylates in Australia clearly represents an important consideration for the acrylic acid plant. Not surprisingly, most imports of acrylic acid have been sourced from Japan which has experienced the world's lowest capacity utilisation rates. The pursuit of markets to utilise excess production capacity, has seen Japan's manufacturers negotiating prices about one-third below those in their home market. More recently prices appear to have returned to normal values and with increasing imports from other sources including the USA.  As an indication of a base or normal price, European industry sources say their industry requires an acrylic acid price of DM2.60 per kg (ca. US$0.80 per pound ) to justify investment (Chemical Week, May 4, 1994). The significant investment currently being undertaken reflects the price being about that base level (and helped by projections for  continuing firm demand). In June 1995 the FOB price for acrylic acid was A$2.20/kg (US$0.72 per pound) and with more recent increases, suggests import prices have risen 26

to about the list price in the USA. Freight costs, say 5 per cent, further reduce any previously held advantage for the Australian acrylic acid manufacturers.

Conclusions During the early 1990s, marginally priced acrylic acid helped the competitiveness of    Australia's user industries. With demand catching up to installed capacity, acrylic acid prices available to Australia are rising to match those of the USA. The competitive advantage once enjoyed by Australia's viscosity and flocculant manufacturers is thereby being eroded and when freight costs are included, their one-time advantage has been eliminated. With plant expansions, typically by 20 per cent in Europe and the USA predicated on projections of sustained demand, there is of course potential for another downturn as occurred in the early 1990s that promoted discounted sales to smaller markets like   Australia. Were this to occur, with a newly established acrylic acid manufacturer in  Australia, such low priced (then 'dumped') imports would probably attract price-inflating anti-dumping duties through Australia's well-tested anti-dumping legislation (see page 105). This outcome should of course be compared with the probable stabilisation of  prices with a local acrylic acid manufacturer. The

complexity and significance of pricing suggests an in-depth sensitivity analysis should be included in a full feasibility study to quantify the effects on users and manufacturers of acrylic acid in WA.

Acrylic acid - Australian imports & prices Trade This

section reviews national and WA imports of acrylic acid and derivatives for the seven year period 1987-88 to June 1995. Figure 11 shows national imports of acrylic acid with no overall growth fluctuating at around 3 500 tonnes per year. During 1994-95, the value of acrylic acid imports was $6m FOB (ie. $1.69 per kilogram, but currently about 80 per cent higher). Given that all acrylic acid is used to manufacture flocculants and viscosity modifiers, it indicates there has been little growth in the Australian market for these products. Over  the same period however, imports (ie. powders) to WA have risen three-fold increasing some 16 per cent per year to represent about one-half of Australian imports. Overall, in   just seven years WA's industry has expanded from one-sixth to about one-half of   Australia's viscosity modifier and flocculant industry. 27

Figure 13 shows that powders, in contrast to the slowly growing liquids market, have been increasing by about 5 per cent per year to now represent about one-half the market (dry weight basis).  As Figure 12 shows for 1994-95, imports are distributed through the year (reflecting also the instability of acrylic acid that requires a high turnover of inventories, ie. frequent purchases). Figure 13 shows increasing imports of powder forms of flocculating agents and viscosity modifiers, currently about 6 000 tonnes per year. It also shows that most growth in imports has been in WA, increasing from 20 per cent to 33 per cent of national imports in the past seven years. It is relevant to note that though WA represents about 40 per  cent of the national market for liquid forms, it represents only 33 per cent of powder  imports. One conclusion is that import competition is most intense in WA, and a projection is the share of the market held by imports (powders) will increase to the national average within five years. Users indicate that imported flocculants and viscosity modifiers (ie. as powders) are functionally equivalent to locally manufactured liquid forms. There is therefore significant potential for a local powder manufacturer like Imdex to grow by import displacement. With flocculant imports at 6 000 tonnes per year and acrylic acid typically one-third by mass of the powder, manufacturing for import replacement would enlarge the acrylic acid market by about 2 000 tonnes. Figure 14 is an indication of the special nature of the Australian market for flocculants and viscosity modifiers faced by its manufacturing industry. It shows the acrylic acid price at FOB import value as a percentage of the viscosity modifier and flocculant price (FOB). The graph directly reflects the variation in the price of acrylic acid in Australia (see Figure 8) and shows its price reduction was not passed on by Australian manufacturers. It is therefore consistent with the observation that acrylic acid prices in   Australia have been below world levels and more favourable than those faced by overseas competitors. The

significance of imports of acrylic acid and derivatives on a weight basis is shown in Figure 15, with average FOB values in Figure 10.

Comment The

price observations serve to illustrate the complexity of relating the benefit of a local manufacturer of acrylic acid to local users. In the three year period 1990 to 1993, there was no benefit to West Australian users for an acrylic acid manufacturing plant. The users then had access to acrylic acid well below the prices available to their overseas competitors. Though of course their advantage at that time should be considered against the benefits of a local supplier during periods of tight world supply.

28

Strategic

summary

The

Executive Summary (page 8) and the related Commentary summarise the salient issues supporting the prospects for the manufacture of acrylic acid. This section comments on some strategic issues. Geographic isolation precludes competitive uses for propylene at the BP Refinery other  than as gasoline providing the acrylic acid plant its only advantage over competing plants. However, unlike most other commodity petrochemicals, the manufacture of  acrylic acid is far more sensitive to the cost of plant than to raw materials. Lower  construction and infrastructure costs at Kwinana help locate it here, over the say the north west, that advantage has to pay for the cost of freighting most of its production. The home market is clearly relevant.

WA industry and market The

home market is largely supplied by two West Australian manufacturers producing internationally competitive acrylic derivatives required by the resource sector. Their  competence is signalled by rapid growth partly attributable to the proven international skills of Australia's resource sector against which their products are improved. The

industry currently produces only the bulky freight-intensive liquid forms with increasing imports of powders. International freight and a small import tariff (5 per cent) provides a margin of advantage to the local manufacturers. In response to increasing imports of powders, and to further its export activity, Imdex Chemicals has commissioned a technically-demanding powder plant. Given all raw materials are imported, with intense competition from powders, it signals their confidence in having a skill advantage. This expressed confidence, without outside technical support, could be considered in context of its competitor, Ondeo Nalco. Nalco Australia is a USA-based subsidiary of Exxon, with manufacturing facilities around the world including in Singapore to service the Asian market and at Botany, New South Wales. Clearly the skills obtained in Australia will not be confined to WA but will be applied according to comparative advantage which in in WA is freight and not raw materials. It is not surprising therefore that Imdex, and not Nalco, has entered the powder manufacturing industry. The cost of raw materials and freight are relevant issues.   All the raw materials are imported with substantial freight costs including acrylamide which, used in the cheaper liquid solution form elsewhere, is imported to Australia in the more costly dry form. Generally freight costs associated with imported raw materials raise the cost of the finished liquid form by about 4 per cent and around 10 per cent for  the powders. Freight is of course even more significant for exported goods. Any skill advantage is clearly not helped by freight costs.

29

Significantly Australian manufacturers have had access to cheap acrylic acid that would not have been available to competitors located in countries with an acrylic acid industry (by application of their anti-dumping legislation). Though more recent price increases will have eliminated much of their advantage, it raises two issues; the impact of a local manufacturer on user-industry; and the consequence if one of the current acrylic acidmanufacturers assumed an interest in the acrylic acid plant. The matter is also discussed under the section describing anti-dumping legislation, page 105.

Conclusion  An acrylic acid plant has been assessed to be potentially viable using propylene derived from the BP refinery, as shown in the appendices following. To be internationally competitive, a production capacity of at least 70 000 tonnes is necessary (see for  example Figure 21). Heavily reliant on export sales, enlarging the home market is clearly important with new acrylic derivatives including in particular superabsorbents for  which an import tariff of 5 per cent would be helpful. The venturer in the acrylic acid plant must have confidence in the home market which may come through some joint ownership perhaps combined with some rationalisation in manufacturing facilities and naturally, and above all, a strong presence in world markets for acrylic acid. The

project is underpinned by the feedstock advantage so that some ownership or  realistic amortisation of the propylene refining unit will be important. However, in the end, it will be the skills and market influence that will be overriding factors in its success. Appendix - Scale influenced by freight, feedstock and scale influenced by freight, feedstock and scale Though

Kwinana is well located with excellent infrastructure and port facilities, the manufacture of acrylic acid can only be justified with access to competitively priced propylene. The isolation of the oil refinery from overseas markets for the propylene has rendered alternative higher valued applications uncompetitive because of freight costs.   As shown pages 19 and 79, the anticipated cost of propylene is estimated to be favourable when compared to most acrylic acid-manufacturing plants. This appendix reviews the significance of propylene on the competitiveness of the acrylic acid plant. It also shows the extent that this advantage can offset the penalty of operating below the size of competing plants and international freight costs for its predominant export sales. F reight 

Freight costs, when compared to world-influenced prices of acrylic acid and propylene feedstock, are constant and an influence on the comparative advantage of the project.   As described later, it is the isolation of WA that provides for cheap propylene but that advantage is reduced by the costs associated with exporting acrylic acid. Freight provides a margin of advantage to domestic sales but obviously reduces the benefit of  export sales.

30

The

transport cost of acrylic acid has been reviewed comparing isotainers with a capacity of 20 000 litres (22.5 tonnes) with the alternative of its movement in some 86 nominal 200 litre drums (215 kg) packed in 20' freight containers. Reflecting the unstable nature of acrylic acid that requires special storage (see page 15) and consistent with industry practice, there is little difference in the cost of freight by either  method. The cost of exporting acrylic acid in substantial tonnage from Fremantle is estimated at US$75 per tonne (or about A$0.10 per kg which may be compared with about US$90 (A$0.12 per kg for imports in smaller volumes by WA's current acrylic acid users). The difference represents a contributing advantage in supplying the local market.  Acrylic acid may be described as propylene combined with oxygen (from air). Given 1 tonne of propylene typically produces about 1.5 tonnes of acrylic acid (see page 16), moving one tonne of acrylic acid is equivalent to moving 0.66 tonnes of propylene, the balance being air. Therefore the cost of shipping acrylic acid may be expressed in terms of the propylene used in its manufacture. Given that one tonne of propylene and acrylic acid may be shipped to Singapore for about the same cost, ie. about US$80 per tonne, propylene requires substantial cryogenic storage facilities which adds some US$80 per  tonne. Based on the contained oxygen therefore, about one-third of the freight for  acrylic acid, that is US$25 may be avoided by not manufacturing in Australia. Clearly, on this basis alone, the breakeven is when about one-third - being the non propylene component of the acrylic acid is supplied in the home market. Freight costs are an influence but compared to scale and propylene, its cost is relatively small. At around 5 per cent of the production cost (as exports), a substantial variation in the freight cost has little influence (especially when compared to the scale of production, see later).   As undertaken later, an alternative expression is if the average freight cost is considered with variation in scale of production assuming all surplus is exported. The effect is small as shown in Figure 20. Propylene feedstock  Cost unpurified 

Propylene is a by-product of the refinery process at the BP refinery where it is converted to gasoline (at 95 per cent estimated efficiency). The value of gasoline to the refinery is the opportunity value being the Singapore price plus the cost of freight estimated at US$10 per tonne, approximating its value in the WA market. Based on this, Fluor Daniel has estimated the value of propylene to BP at A$235 (US$176) per tonne (ie. based on the current production at 70 per cent purity, see page 79). This value would therefore represent about the minimum the refinery would be prepared to negotiate a contract to supply propylene for purification to the required chemical-grade form (ie. 95 per cent). Cost purified  31

The

cost of facilities to increase the purity of propylene from 70 per cent to 95 per cent purity (ie. chemical-grade) and including required intermediate storage is estimated at  A$15m. This cost is recovered totally by the volume of chemical-grade propylene required by the acrylic acid plant and, if viable, exports of any surplus. As shown by the Fluor Daniel study, exports of chemical grade, even at more substantial volume of 60 000 tonnes, is not viable unless its value in Singapore remains above US441 per tonne. When associated with the acrylic plant however, the cost of the facilities compared with the more limited volume available for exports, it clearly precludes this option. In other  words, the cost of purification will be totally recovered by the propylene required for the acrylic plant (and the crude propylene price will be determined for its application for  gasoline, and not by its alternative application for export as chemical-grade propylene). The

cost of chemical-grade propylene feedstock depends on the amortisation (payback) period. Oil refineries typically assume a three-year period which Fluor Daniel has calculated to imply a cost of A$518 (US$388) per tonne. If the refining unit was operated by the acrylic acid plant venturers, the cost of chemical-grade propylene, based on a six-year period, would reduce by one quarter to A$376 (US$282) per tonne. These prices could be compared with Asian levels where propylene in September 1995 ranged to US$450 per tonne. The amortisation period is therefore clearly important to the viability of the plant. Though

conservative, the three-year period (ie.with a higher feedstock price), has been assumed for the financial analysis to calculate the IRR and payback period (see page 79). Cost importance

It is important to note though propylene is the only raw material, its price is not as influential on acrylic acid production as most other commodity petrochemicals. This is well illustrated in Figure 17 that shows the variation in the cost of propylene in relation to the cost of acrylic acid. Like freight, propylene costs are not influential showing again the dominating influence of scale economies (see Error! Reference source not found.). Scale

Production economics favours large scale acrylic acid plants with relatively low feedstock costs and manning independent of scale. Based on the analysis undertaken by Fluor Daniel, the importance of scale is clearly shown in Figure 18 and as previously indicated it is more influential on production economics than most other commodity petrochemicals. As shown in that graph, a 30 000 tpa plant would, all else equal, operate at a 40 per cent operating cost penalty compared with a 100 000 tonne unit. The

three key variables may be considered collectively to identify the scale of plant required in WA to be competitive. The assumed benchmark for competitiveness is the production cost of a 100 000 tonne acrylic acid plant (as indicative of typical world scale) using chemical-grade propylene at different prices. 32

For this assessment, chemical-grade propylene is valued as the ex BP refinery crude price (ie. A$235, ie. US$176) plus the variable cost of its purification to chemical-grade compared with a benchmark plant using it at US$450 per tonne (ie. Singapore price; 1 tonne of acrylic acid produced from 0.63 tonne of propylene). Expressed as a percentage, the advantage to the WA plant with access to favourably priced propylene can then be directly compared with its disadvantage in scale and freight expressed. The following graphs show how competitiveness depends on the amortisation (payback) of  the propylene purification plant. For comparison, a 45 000 tonne pa plant (as used in the financial analysis) producing only for the home market with no exports (therefore not incurring international freight costs), as shown in Figure 19, would still be about 9 per cent less competitive than the 100 000 tonne plant. The importance of scale, that can overwhelm any feedstock advantage, is clearly demonstrated. In Figure 20 a range of scales are considered with a three year payback for the purification plant as typical of the oil refining industry. The graph shows the scale penalty, the average freight cost (assuming a home market of 4 000 tonnes) at US$75 per tonne, and the propylene advantage (that ranges from 3 to 10 per cent). The sum of  the propylene-derived advantage and the freight and scale disadvantages is shown as the solid line. Using the benchmark plant as described above, it would be competitive in WA at a scale of around 75 000 tonnes. Of course the outcome is very sensitive to the benchmark value for propylene (in this example at US$450 per tonne).  A 6 year amortisation for the propylene purification unit is shown in Figure 21. Here the breakeven scale has been reduced from 75 000 tonnes to around 67 000 tonnes reflecting the greater benefit derived from the lower cost of propylene (ranging from 8 to 13 per cent with increasing scale). The

previous three graphs assume a market value for chemical-grade propylene at US$450 per tonne for a competing 100 000 tonne acrylic acid plant. It is that margin between the assumed international value and its cost in WA which compensates for  penalties of scale and international freight. A lower propylene value requires a larger  scale as shown in Figure 22 where a benchmark value of US$375 per tonne requires an 80 000 tonne plant for equal competitiveness. The

margin between the crude propylene value negotiated with the refinery at A$235, ie. US$176, and the Singapore benchmark price for chemical grade propylene, impacts on the scale of plant required to be competitive. The variation in chemical-grade prices and impact on competitiveness is illustrated in Figure 23. The point at which each curve cuts the 0 line from below is where the plant begins to become competitive against the benchmark 100 000 tonne plant. The

amount of propylene immediately available at the refinery restrains the scale of  plant to around 90 000 tpa. At this scale, the minimum benchmark value for chemicalgrade propylene for the plant to be competitive is about US$300 per tonne (based on 33

  A$234.60 negotiated for supply of crude (ie. 70 per cent) propylene from the WA refinery. F inancial 

 A commercially acceptable return has been demonstrated at a scale of 45 000 tonnes (see analysis by Fluor Daniel page 79) reproduced here as Figure 25 based on an identified price with 90 per cent of production sold overseas.   As elsewhere the returns are sensitive to assumptions - in this example to net prices. This is illustrated in Figure 26 where a reduction in the selling price by just 15 per cent of the acrylic acid produced in a 45 000 tonne plant, reduces the return to about the same level as a 30 000 tonne plant shown in Figure 25. Financial returns are helpful but clearly require qualification in a historical perspective of prices and costs. Conclusions Though

providing commercially acceptable rates of return at 45 000 tonnes, even on a conservative basis, as shown by Figure 20, it is only at a scale of around 70 000 tonnes that the plant has an absolute comparative advantage (assuming a chemical-grade propylene benchmark price of US$450 per tonne for a 100 000 tonne plant using crude propylene at A$234 per tonne). Even larger scales are required for lower benchmark values as shown Figure 23. In the end, it is the negotiated price of propylene, as its opportunity value to the BP oil refinery that determines the competitive scale and competitiveness of the acrylic acid plant. The feedstock value in turn depends on the cost of freighting propylene or its product gasoline to the principal overseas markets. In other words the plant's viability is driven indirectly by international freight costs though its competitiveness is dominated by scale. On the defined assumptions, a plant of around 70 000 tonnes capacity, provides for competitive operation and sound commercial return. It is important to note that these analyses are sensitive to many variables that include: The

benchmark value assumed for chemical-grade propylene used by the 100 000 tonne world-scale plant (eg. US$450 per tonne). Larger plants to 300 000 tonne capacity are in use with economies of scale. The low cost of propylene may enable cheaper (ie. less efficient) technology (reducing the required scale of plant for competitive manufacture). The higher grade of glacial acrylic acid required by Australian users may be able to use different technology or additional purification. Surplus chemical-grade propylene is not economically produced for export or for  other applications (ie. surplus propylene will continue to be converted to gasoline so the cost of purification will continue to be recovered by that used in the acrylic acid plant).

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These

are considerations that should be incorporated in a more comprehensive feasibility study. Appendix - Cost factorsCost factors This

appendix details some of thekey factor costs and considerations for the acrylic acid plant. Import tariff and anti dumping protection are described in the following appendices. E lectricity prices

 A cost of US$0.055/kWh may be assumed for the plant for uninteruptable power. G as

Pipeline related costs (including $1.2 billion debt funding) increase the cost of gas in the Kwinana region by at least 50 per cent above that negotiated by the North West Joint Venturers.  A price of about $4.00 per gigajoule may be assumed at Kwinana.

Construction cost 

  A report by Chem Systems prepared for the Department of Resources Development, Western Australian Competitive Cost Issues of September 1994 describes the international competitiveness as they apply to chemical projects. Table

II.C.1 in that report summarised estimated capital cost factors for 1994 compared with the USA Gulf Coast. They were also projected at year 2000 (reproduced here in blankhesis). The factors ranged from 0.85 (0.95) for China and India, 0.95 (0.95 to 1.00) for  Thailand, Malaysia and Taiwan, 1.00 (1.00 to 1.05) for Philippines and South Korea, 1.10 (1.15) for Singapore, 1.15 (1.20) for Indonesia and 1.30 (1.30) for Japan.  Australian capital city costs were estimated at 1.05 now and in year 2000. The costs at Kwinana were judged to be equivalent to Sydney.

T ransport

costs

Road transport costs are between A$0.08 and A$0.10 per tonne per kilometre.

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For some products backl oading  rates enables West Australian companies to competitively supply regional markets in eastern Australia. State G overnment measures The

West Australian government has assisted with the provision of infrastructure to industry including the upgrading of railway lines, the provision of roads, identification of  opportunities and other measures to facilitate investment. As a general principle, investments may be supported to the net benefit of the project to the State. O ther

costs

Water costs can be assumed at US$0.21/kilolitre Wages can be assumed to be effectively at Eastern States petrochemical rates (that are above the general process industry norms). Taxes and insurance - a penalty of 1 per cent may be assumed. Appendix - T ariff assistanceTariff assistance

  Assistance to manufacturing industry at the Federal Government level remains dominated by import tariffs and anti-dumping protection (see page 105). Importtariffs are (price-inflating) taxes on imported goods that are deemed to compete or substitute for similar goods made in Australia. In Australia tariffs are applied at the FOB level currently with a ceiling rate of 8 per cent phasing down to a single rate of 5 per cent in July 1996. They serve to increase the price available to Australian manufacturers as their market price is generally determined by competing imports. Import tariffs are no longer made available to new industries or increased for new industries. A system called Tariff Concession Orders allow for duty free entry if  manufacturing in Australia ceases. The Order may be revoked by an intending manufacturer of similar goods (including substitutes) for which the tariff had been established. The

current relevant tariffs are shown in the following table. Though acrylic acid and its esters do not attract an import tariff, polymers or preparations of acrylic acid are assisted by an 8 per cent tariff (5 per cent after July 1996). International freight charges, handling and related storage and handling charges now often provide a greater margin for Australian manufacturers. Tariffs help but are not significant for investment decisions specially for the acrylic acid plant that will sell some three-quarters of its production into international markets. Anti-dumping duties (see page 105) are generally more important. In the end, whilst not helping international competitiveness, import tariffs by raising overall corporate returns, indirectly support (the less profitable) exports sales at below home market levels. 36

For acrylic acid, import tariffs help related products. Those products are the acrylic polymers including superabsorbents, surface active ingredients and viscosity modifiers and flocculants and potentially acetic acid as its by-product of manufacture. There is no tariff on any acrylic monomers including acrylic esters. Product Harmonized

Code Rate %

Acetic acid 2915.21.00 (04) 8 Acrylic acid 2916.00.00 (21) 0 Acrylic esters 2916.12.00 (22, 23, 24, 0 25) Methacrylic esters 2916.13.00 (26) 0 Acrylamide 2924.10.00 (13) 0 Acrylic acid polymers (inc. flocculants, viscosity modifiers, polyacrylic acid 3906.90.00 (09) 8 superabsorbents)

Appendix - Anti-dumping legislationAnti-dumping legislation

Dumping is the practice of selling goods at prices below the home country (ie. to marginal levels) to disadvantage (injure) industry of the importing country. Anti-dumping duties enabled by anti-dumping legislation, are aimed at correcting the imbalance between the export price and the place of manufacture. Even without their application, the threat of application of dumping duties serves to inflate the price of imports. Though

on the one hand increasing costs for user industries, anti-dumping legislation may be essential for newly developing activities without the resources to compete against low or marginally priced (dumped) imports as occurred in the early 1990s for  acrylic acid and derivatives. Such marginal pricing is common during periods of capacity underutilisation as occurred for acrylic acid in the early 1990s. A local manufacturer has to be able to claim 'injury' (and a link) before the imposition of anti-dumping duties. The benefit to the user of access to the 'dumped' goods is not a consideration.   As shown on the subject of prices (page 49), Australian imports of acrylic acid (and most acrylates) have been below levels in the home market. In the absence of an  Australian manufacturer, injury to local industry has not occurred and price inflating antidumping duties were not necessary. If a manufacturer were to establish in WA, the acrylic acid-using industry could lose access to these marginally priced imports (if the manufacturer claimed to be injured from what could then be described as 'dumped goods'). Of course it is not clear whether the conditions that promoted the sale of the marginally priced goods will re-occur (ie. the substantial capacity utilisation especially in Japan) or  37

that such appeal for relief would be successful (although probable). In the end however  as previously discussed, the benefits to the State of a local manufacturer have to be carefully considered in the context of the market (ie. the acrylic acid users). Dumping is a contentious issue but an important feature in the consideration for the feasibility of an acrylic acid plant in WA. In the absence of Australia's well proven antidumping legislation, a new plant could be subject to intense competition during periods of world capacity underutilisation as occurred in the early part of the 1990s. It is relevant to note that Australia's chemical industry is world prominent in making claims for relief  from lowpriced goods. The existence of this well proven protection system will reduce the risks for the any newly established chemical plant without the resources to compete against low priced (dumped) imports. Australia's well used anti-dumping legislation has provided more than adequate protection for such chemicals as sodium cyanide, sodium phosphate, sodium carbonate and other medium scale chemical activities. The key issue that remains is the consequence to the acrylic acid-using industry of access to less volatile raw material prices as would be set by the local manufacturer operating behind Australia's anti-dumping legislation. This

last point assumes an extra dimension if an Australian-based acrylic acid-using viscosity modifier and flocculant manufacturer assumed an interest in the acrylic acid plant. The application of anti-dumping duties (with adopted national 'support values') would provide a measure of competitive advantage that could be partially offset against the returns from the acrylic acid plant. Naturally, the extent and availability of antidumping legislation in Australia is not assured and the local market for acrylic acid is small compared to the overseas sales of the project. In the end, anti-dumping legislation is a consideration but obviously not an underpinning factor in assessing the viability of the plant. Appendix - Methodology and Information Sources

SourcesMethodology

and Information

The

report is a joint project between Fluor Daniel Australia Ltd and Chemlink Pty Ltd and it is based on extensive on-line research of information providers including Dial og . Other information used include in-house resources, reviews of current literature such as the Chemical Marketing Reporter , Eur o pean Chemical News, Chemical and  Engineering News , Chemical Week , previous reports such as Opportunities f or t he Manufacture of Industrial  Chemicals in WA, and other published information including Chemicals and Heavy Industries 1992, Etonwood Direct ory  of t he Chemical Industry ,  ACTED resources including Guide t o Chemicals in Australia and Kirk-Othmer  Encycl o pedia of Chemical Tec hnol ogy  It also used the published data resources published by the Australian Bureau of  Statistics (ABS). This includes Table MM04A for imports, Table MX04A for exports as

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