João Parolin, CEO,

Oxiteno

"Oxiteno’s business has seen significant growth in terms of volume, however, there has been some pressure relating to costs due to an increase in inflation as well as commodity prices."

On August 16th it was announced that Indorama will acquire Oxiteno in a deal worth US$1.3 billion. What led to this transaction?

The Ultra Group, which owns 100% of Oxiteno, main business focus is on fuels distribution companies. It started with LPG distribution and over time has entered into the liquid fuels market. The oil and gas and energy markets in Brazil have been shifting with changes in legislation, resulting in Petrobras changing its strategy and concentrating more upstream. Currently there is a lot of attention on the energy transition, which creates new opportunities for a group such as Ultra that works in the fuels distribution area. The group’s portfolio is very diversified and they have thus decided to sell all the businesses not related to fuels distribution in order to concentrate in this specific area. This led to the Indorama’s acquisition of Oxiteno.

Indorama is a Thailand-based group which bought part of Huntsman’s ethylene oxide, propylene oxide, surfactants and ethanolamines business approximately two years ago. The acquisition of Oxiteno complements this business and creates a strong combination for Indorama in the surfactants business in the Americas. Oxiteno strength in innovation and pipeline of new products can create additional growth for Indorama. We also have a surfactants plant in Texas which provides a downstream outlet for ethylene oxide and propylene oxide.

How has Oxiteno performed throughout the Americas in 2021?

Throughout the pandemic we have seen an increased demand for our crop solutions, home care, and personal care products, and this has continued in 2021. Oxiteno is also the largest producer of brake fluids in Latin America, and although this market suffered during lockdown in 2020, as economies started to recover and restrictions were lifted demand increased to pre-pandemic levels. The same can be said for automotive paints and coatings. Oxiteno’s business has seen significant growth in terms of volume, however, there has been some pressure relating to costs due to an increase in inflation as well as commodity prices. Furthermore, significant increases in demand have caused logistics and supply chain disruptions. Despite these challenges, Oxiteno announced record results in Q2 2021.

Can you describe the growth of the Brazilian agribusiness in recent years?

Brazil is privileged as it still has a great amount of land available for agricultural development without having to touch the rainforest. The country also has ample water supply, ideal weather conditions and state of the art technologies which allow us to be a strong player in agriculture. On the market side, agriculture is connected to megatrends such as the rise in food consumption as the world population increase, and the move towards biofuels such as ethanol aligned with the energy transition. The agricultural sector is a key market for Oxiteno, and we continually invest in R&D to provide innovative and sustainable crop solution products.

What is the company’s approach to workforce diversity and inclusion?

Oxiteno’s workforce goals are centered around diversity and inclusion, equal pay and people development. In 2019 we launched our “Together” diversity and inclusion program in order to reinforce our commitment with these values.

Can you elaborate on Oxiteno’s commitment to a green economy?

As a leader in the production of surfactants and specialty chemicals, Oxiteno offers a comprehensive product portfolio for a variety of applications. We know that today's decisions can help build a more sustainable future and therefore the company develops its value chain by balancing environmental, economic and social factors. In 2019, Oxiteno created its 2030 Strategic Sustainability Plan, which has set out goals based upon eight pillars – supply chain, economic performance, environment, safety, workforce experience, compliance and integrity, product portfolio and product safety – each with the aim of ensuring the continuity of the business and helping build a more sustainable future.