Thailand’s construction material conglomerate Siam Cement Group (SCG) has set up a joint venture with Vietnam Oil and Gas Group (PetroVietnam) to build Vietnam’s first petrochemical complex with a total investment of 188 billion baht ($5.6 billion).

The Thai company owns 71 per cent through its wholly-owned subsidiaries Vina SCG Chemicals Co Ltd and Thai Plastic and Chemicals Pcl in the JV, while PetroVietnam holds the remaining 29 per cent.

Roongrote Rangsiyopash, president and CEO of SCG, told local media that it has already made the initial investment of 30 billion baht for purchasing the land. Construction is set to start next year and commence operation in the first half of 2022.

Located 100 kilometres from Ho Chi Minh City, the Long Son Petrochemicals project will develop a one-million-tonne ethylene cracker that can produce up to 1.6 million tonnes of olefins per annum.

The supply will help serve rising domestic demand and reduce Vietnam’s import of petrochemical products, Rangsiyopash said.

Since this project has been postponed for years, the cost has shot up by 20 per cent from its previous estimation of $4.5 billion. About 30 per cent of total investment will be used for the development of a deep sea port and other facilities to support the petrochemical plant.

The company’s filing cited that financing will be through a combination of foreign denominated debt and equity at 60:40.

Rangsiyopash added the project’s internal rate of return is expected to be at 13-14 per cent.

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