MEXICO CITY—Grupo Kuo S.A.B. de C.V. and Repsol S.A. have agreed to create a new company to produce synthetic rubber and chemical accelerators.
Once all production sites are fully operational, Grupo Kuo said the to-be-named company is projected to produce 30,000 metric tons of rubber chemicals and 510,000 metric tons of synthetic rubber per year with estimated annual sales of about $700 million.
Both partners said the agreement is subject to regulatory approvals and will be headquartered in Madrid, the headquarters of the firms' existing joint venture Dynasol Elastomers S.A., which was founded in 1999.
“The idea is to provide integrated solutions to the market based on different families of products that will basically cover all the needs customers will have in terms of synthetic rubber,” said Tomas Acevedo Sanchez, commercial director with Grupo Kuo.
Sanchez said the new company will consist of Dynasol, Grupo Kuo's Industrias Negromex S.A. de C.V. (INSA) unit and Repsol's General Quimica S.A. unit. For now the partners are referring to the new company as “Dynasol,” but the name will be finalized after regulatory approvals. The new company will operate as a singular entity.
Repsol will become a 50 percent stakeholder of INSA—which includes half of Grupo Kuo's 50 percent share in INSA's Chinese joint venture—and Grupo Kuo will own 50 percent of General Quimica. The firms did not disclose investment figures.
“We are very satisfied with the consolidation of this alliance as, in addition to the fact that Repsol is an excellent partner, this new venture will strengthen our position as a global player in the synthetic rubber market,” Grupo Kuo CEO Fernando Senderos Mestre said in a statement.
The new company will focus on developing products for the high performance tire sector, but Sanchez said the scope will not be limited to that industry because Dynasol currently serves the asphalt modification, adhesives, sealants and technical compounds industries.
Sanchez said the tire industry is growing at a rate of 3.5 percent annually, and Grupo Kuo projects that growth to continue for about eight years. The firm estimated that by 2020, about 50 percent of all passenger or light truck tires will be converted to high fuel efficiency tires, which Sanchez said will require special types of rubber and rubber chemicals.
“In terms of technology, we will combine our existing know-how to develop new markets like the high-performance tire sector by offering products and polymer systems that exceed customer expectations,” Sanchez said. “That's something that we wouldn't be able to do if we were separate.”
INSA consists of an emulsion and nitrile butadiene rubber facility located in Altamira, Mexico, and INSA GPRO Synthetic Rubber Co. Ltd. (IGSR)—an NBR joint venture between INSA and Jiangsu GPRO Group Co. Ltd. located in Nanjing, China. The Chinese joint venture is set to begin operations at the end of the second quarter. GPRO Group will retain its 50 percent share of the joint venture, Sanchez said.
The two units have a combined capacity of 180,000 metric tons of emulsion rubber per year with most of that production focusing on NBR.
General Quimica produces chemical accelerators at its facility in Alava, Spain. The unit has the capacity of 30,000 metric tons of rubber chemicals per year, Sanchez said.
“This qualitative leap in our alliance with Grupo Kuo will make Dynasol an important player in the high-performance tire market, and we will significantly increase our production capacity and supply to our chemicals division,” Repsol Chairman Antonio Brufau said in a statement.
Grupo Kuo and Repsol each own a 50 percent share of Dynasol, a manufacturer of SBR. The unit operates facilities in Altamira and Santander, Spain. It is set to open Liaoning North Dynasol Synthetic Rubber Co. Ltd.—a joint venture with Shanxi Northern Xing'an Chemical Industry Co. Ltd. in Panjin, China. The agreement will have no effect on Shanxi's 50 percent share of the joint venture, Sanchez said.
Once the Chinese facility is fully operational, Dynasol's three facilities will produce an annual capacity of 330,000 metric tons of SBR, solution SBR, thermoplastic rubber (SBS) and hydrogenated rubber (SEBS). Dynasol also operates sales offices in Houston and Shanghai, with a technical service laboratory in Shanghai.
Grupo Kuo is an industrial conglomerate with headquarters in Mexico City, reporting about $2 billion in sales as of 2014. The firm exports to about 70 countries and consists of 17,000 employees throughout six business units.
Repsol is a global energy company headquartered in Madrid that consists of more than 24,000 employees in more than 40 countries.