the
versatile chemical Now reaching beyond historic roles in building and agriculture, lime today has become just about the No. 1 chemical in both diversity and tonnage of uses. With remarkable effectiveness and cost-benefit ratios, among other things modern lime can:
ABSORB ALKALIZE BENEFICIATE CAUSTICIZE CLARIFY COAGULATE DEHYDRATE DISINFECT FLUX NEUTRALIZE PLASTICIZE PURIFY PRECIPITATE REFINE STABILIZE all this and more can be done with
LIME
Petrochemicals face problems in Canada Unless the government takes vigorous action, the Canadian petrochemical industry will, in a couple of years, be even worse off than it is now. That's the gist of a report recently made public by the Consultative Task Force on Petrochemicals. The task force consisted of 11 petrochemical industry executives, four civil servants, two union representatives, and a university professor. It was one of 23 such bodies established, as a result of this year's annual "First Ministers' Conference," to develop programs to meet the needs of Canadian manufacturing. It's ironic, the task force notes, that Japan and West Germany, with very limited oil and gas resources, have become major forces in international petrochemical markets, while Canada has exported unprocessed resources and imported petrochemicals with five to 10 times the value of the hydrocarbons used to make them. It's perhaps equally ironic that Canada set out to expand its petrochemical production just when it did. Next year, the Canadian petrochemical industry will complete a $2.5 billion investment program that will more than double 1975 production capacity. "However," the report relates, "major environmental changes have occurred since the commitment was made to this nearly completed investment program." Petrochemical growth rates have slowed. Overcapacity is widespread. Product prices haven't kept pace with ever-rising feedstock costs. "Profit margins currently, and for the foreseeable future, are inadequate to recover invested capital. There is urgent concern within the industry that failure to achieve profitable utilization of existing and soon-to-be-commissioned facilities will jeopardize future petrochemical investment in Canada." The Canadian petrochemical industry suffers a cost disadvantage compared to its "major competition" on the U.S. Gulf Coast, which benefits, the task force says, from lower construction labor costs, milder climate, and economies of scale. Initial cost of new petrochemical plants is about 20% higher in Sarnia, 25% higher in Alberta and Montreal. The higher initial cost relates directly to depreciation, insurance, interest charges, and property taxes; hence, it necessarily also influences production costs and return on investment. "Unless the initial investment cost differential can be corrected or counterbalanced, the probability of major new investment in the industry during the next 10 years is low." Accordingly, the task force makes a number of recommendations, not all unanimous, aimed at improving profitability. For example, the Canadian government should "at least" ensure that the cost of feedstocks and energy for petrochemicals doesn't exceed Gulf Coast costs. It would be even better if Canadian manufacturers were to pay less than pre-
vailing world prices. However, lower feedstock costs should be achieved by reducing the government's take, not the oil industry's. "The consequent development of competitive manufacturing industries could be expected to more than offset such a revenue loss," the task force says. Excess refining capacity in eastern Canada has depressed prices of fuel oil products, placing crude-oil-derived petrochemical feedstocks at a further cost disadvantage. The task force endorses current efforts to use Canadian refineries to "meet growing U.S. demand" and further suggests that negotiations be extended to include Canadian refineries that process Canadian crude oil. Also, Canada should negotiate a bilateral free trade agreement with the U.S. for a number of specified petrochemicals, "using the export of additional quantities of natural gas as bargaining leverage." But to promote downstream industries, the government should institute "staged tariffs" that would give relatively more protection to products with higher added value, such as rubber, plastics, paints, and synthetic fibers. The task force also calls for tax changes, including a higher investment tax credit, accounting procedures that would compensate for effects of inflation, and remedies for tax structure inequities that now penalize newly formed petrochemical joint ventures. •
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liiAiyirtbïHMa DIVISION Market Development Department 369 Marshall Avenue St. Louis, Missouri 63119 314-961-3500
Aug. 28, 1978 C&EN
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