Octal, the world’s largest PET sheet producer and integrated packaging company with its production complex in Salalah, plans to build a PTA (purified terephthalic acid) plant as part of its backward integration vision as well as a dairy and poultry tray facility in Saudi Arabia to boost product sales to the GCC from the Oman site, a senior official says.

William Joseph Barenberg, Jr, Octal’s executive vice president and COO, also said the company is currently in the process of launching or developing several new PET material platforms.

The company currently has capacity to produce 1 million tonnes annually of PET sheet and resin and actual production is close to that figure.

“We are distributing our new manufacturing capacity to complement our world-class PET complex in Salalah, Oman, rather than through expanding our existing operations alone. Future investments will be seen in the US, EU and in the GCC region, in order to meet the needs of clients who require shorter lead times and to provide a closed-loop solution to their converting process,” said Barenberg.

The company is currently building a $18 million plant in Ohio to produce food-grade sheet from skeletal waste emerging from Octal’s thermoforming customers.  The facility is on schedule to commence operations early in 2015, said Barenberg.  It will have an initial capacity of 25,000 tonnes/year, and Octal expects to double that in the next 18 months.  “We also have plans to increase Octal’s presence globally with strategically located facilities that can drive wholesale material conversion to PET,” Barenberg said.

“This is the premise of the success of the Salalah site and we intend to continue this philosophy with follow-on investments that add value to Octal’s overall global brand.”

Barenberg: major developments on the way

Elaborating on why Octal was distributing its new manufacturing capacity, Barenberg said: “Driven by technology and innovation, Octal constantly looks at identifying new avenues that best add value to the company, our customers and the PET packaging industry in general. We focus on performance enhancing modifications to both the resin and the thermoformed product as simply adding capacity without innovation is a futile strategy.”

Commenting on the proposed PTA plant, the official stated: “Octal has always had as part of its master site plan backwards integration into PTA, PET’s primary raw material.  A PTA plant properly sized for the 1 million tonnes of PET capacity already on site would complement the existing investment and allow for lowering the cost of delivered raw materials. The site is already prepared and we are currently looking at a number of technology suppliers that have their own set of merits. Capital cost, variable operating costs and lead time all play a part in this selection process.

“Generally, a greater upfront investment can yield better variable costs and vice versa, so it is a tradeoff.  We are generally willing to invest for robustness of process versus the one-time benefit of lower capital as it provides our customers with more value in the long run. With one million tonnes of PET resin capacity, we would intend to fairly closely match the PTA plant output with the on-site need.  We refer to this process as balanced integration. It effectively eliminates the need for merchant sales and allows Octal to focus on cost and quality. With on-site PTA production, the benefits are many and include quick feedback on quality, elimination of a leg of freight, and high operating rates.”

About the new PET cup and dairy and poultry tray facility in Saudi Arabia, Barenberg said it would cost $20 million to establish and was expected to generate $70 million revenues per year.

“The first phase of the Saudi plant will have a production capacity of approximately 18,000 tonnes of product.  This will be the case until we expand in about a year, when capacity will substantially increase to over 25, 000 tonnes.  In addition, we are also considering setting up a second location that will provide better service to our customers,” he said.

NEW PRODUCTS

Interior of the Octal plant

Providing details of the new platforms Octal will launch, Barenberg said: “Our closeness to the end market has allowed us to uncover many areas of dissatisfaction with clear rigid packaging, and with integration back into the resin, Octal is in a unique position to address these areas of performance through development of resin characteristics that will enable us to replace PVC and OPS in very demanding applications.

“We will soon commercialise resin and sheet with greater impact resistance, better injection moulding performance, increased heat resistance, better glue adhesion and better printing performance, to name just a few benefits. Our freezer grade and impact resistant PET sheet is set to be unveiled at this year’s Pack Expo 2014 in Chicago and will prepare us for further expansion in the frozen convenience foods sector and consumer goods, such as toys and electrical goods. We have also recently developed PET egg trays that have been shown to reduce breakage and increase the amount of product transported per shipment.”

EXPORTS AND DOWNSTREAM

Octal ships its products to more than 75 countries

Octal exports over 98 per cent of its production to more than 75 countries worldwide. The company has targeted further shipments into the Middle East and North Africa and aims to achieve a 20 per cent share in the Mena area by the end of this year.

Saudi Arabia and the UAE account for the majority of its current sales into the GCC and the new PET cup and dairy and poultry tray facility in Saudi Arabia will massively increase that number. Beyond the GCC, Octal’s main markets are the US and Europe.

Commenting on benefits to downstream industries in Oman, Barenberg said Octal’s customers are able to significantly reduce their cost using the company’s unique-to-the-world DPET (trademarked) sheet, sometimes generating dramatic cost savings. “The enhanced quality and consistency allows them to achieve higher yields and to down gauge, reduce total material required and almost entirely eliminate wastage due to DPET’s complete traceability and recyclability. In addition, many of our customers have aggressive sustainability goals that DPET allows them to meet with its stellar carbon footprint, source reduction and replacement of less sustainable polymers, such as PVC and OPS,” the official highlighted.