Methanex to mothball Waitara plant

By NZPA

Friday 30th September 2005

Methanex announced today it is mothballing its methanol plant in Taranaki's Waitara Valley, although no jobs will be lost at this stage.

Gerry Kennedy, public affairs manager for Methanex New Zealand, said all 81 employees will be kept on until at least March 2006 to carry out a major maintenance overhaul on the plant.

The Waitara plant, which produces 500,000 tonnes of methanol a year, was a "flexible asset" and production could resume in future if Methanex can secure more economically priced gas.

"The economics need to be right. We need to have reasonably priced gas in New Zealand to operate and the market and demand needs to be there worldwide for us to produce," Kennedy said.

A question-mark has hung over the future of the plant for some time as Methanex struggled to secure new gas supplies as the Maui gas field dwindles.

Methanex, which in its heyday was Maui's biggest customer using 90 petajoules of gas per year, closed its larger plant in Motunui late last year.

Production has declined from 2.3 million tonnes in 2002 to the current 500,000 tonnes since the life expectancy of Maui was dramatically reduced in 2003.

"Gas has been a problem in New Zealand since February 2003 with the redetermination of the Maui field," Kennedy said.

"At that point Methanex lost, ostensibly, two years' supply of gas."

Methanex ran two Taranaki plants at 40% capacity until the end of last year, when it closed the bigger Motunui facility with the loss of 40 jobs.

"The gas price has gone high and there is a shortage of gas. We are out there in the market just like everybody else trying to secure gas for next year," Kennedy said.

Kennedy said Methanex would have a clearer picture about its future outlook towards the end of the year.

If the shutdown becomes permanent, it will be a big loss to the country. At full production, Methanex injected $200 million a year into the national economy and $40 million annually into Taranaki.

Bruce Aitkin, chief executive of Methanex NZ's Vancouver-based parent, said the company remained committed to the region.

"We remain focused on meeting our customers' growing needs for reliable and timely supply in the Asia Pacific region," he said.

Methanex has an 140,000 tonne storage terminal in Yeosu, Korea and a fleet of vessels from which to supply customers in Asia.

The firm also announced plans today to permanently close its methanol and ammonia plant at Kitimat, British Columbia.

Methanol is a chemical compound used as an antifreeze, solvent, and as a fuel blend. It is used in some race cars as it is not nearly as flammable as petrol.

The largest use for methanol is in making other chemicals. About 40% of global production is converted to formaldehyde, and from there into products like plastics, plywood, paints and explosives.

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