What have been the latest developments for Esenttia in Colombia?

Esenttia is a producer of polypropylene which is part of the Ecopetrol group, the largest company in Colombia. We have two polypropylene plants in Cartagena; one splitter, one masterbatches and compounds plant, and we also have a sales subsidiary in Peru.

In Colombia, we produce homopolymers, random copolymers, impact copolymers, terpolymers, masterbatches, and we also commercialize low-density polyethylene (LDPE) from Ecopetrol as well as LLPE and HDPE from other foreign suppliers. We have always been heavily focused on exports, but at the same time we support our customers in Colombia, maintaining 70% of its market share. Our capacity is much larger than the local market, so we export 60% of our production. We have a capacity of 470,000 mt/y in our two polypropylene plants.

What was the business like in 2019, and now in 2020 with the pandemic?

2019 was a very good year, with an EBITDA of around US$90 million and, although 2020 started very well, the months of April and May were difficult due to the coronavirus pandemic, and we were forced to reduce capacity to 85%. By June and July, however, we were already operating at our normal rate. During the pandemic, we have seen two conflicting forces: the initiatives by the government to maintain people safe, and the need to keep the economy going. In terms of industries, the ones that performed better were those related to health, hygiene, and food and household packaging. On the flip side, the automotive segment was hit in the main economies like Brazil and Mexico, and that affected us.

What is the status of your plan to expand production considering the current uncertainty?

Our plan to add another 70,000 mt/y is still ongoing, because it is still strategic for the long term. We continue advancing the project having already purchased the main equipment and we expect to have most of the detailed engineering completed this year. The expansion will use German technology, and will use feedstock imported from the U.S.

What are the main markets for Esenttia and what products are becoming more important to your business?

We have a very strong focus on Latin America. Beyond Colombia, we have a small market share in Brazil and Mexico, but these markets are so large that they represent a very important business for Esenttia. We have also been growing our share in Central America and the Caribbean and other South American countries. Over the last years, demand has exceeded our capacity, so our goal with the expansion is to go back to these customers and markets that we were not willing to serve before.

Product wise, we are trying to move into more specialized products that have more value added, such as impact copolymers. Within that, we have different lines, including TPOs, or high-impact copolymers that give us an edge in some markets. In random copolymers we have some clarified products that also work very well, for instance our pipe grade. Terpolymers is a very important product for the future as Latin America imports most of these from Europe. Furthermore, we make very good homopolymers; some highly impact resistant, some clarified, and we also have a very good grade for medical cloth that is being very successful, even if that market is very competitive.

What are the main logistics advantages of being in Cartagena?

Cartagena has a strategic location between the world’s main regions and has a privileged logistics situation, with a number of ports and weekly routes to Latin America, the US and Europe – that connectivity is very important. Internal logistics in Colombia present some challenges however, due to the Andes mountain chain that crosses the country from south to north and the fact that our roads still need to improve.

What is your view on circular economy initiatives?

Plastic consumption will continue to grow, but the circular economy is here to stay and all of us must commit to it. From both a conceptual and pragmatic approach, we cannot keep using the planet as if its resources were endless. We have several projects related to the circular economy, and our social action lines are very linked to that. One of our strategic projects is to build a plant to produce recycled plastic.