Mitsubishi Gas Chemical Plans to Halt Production of Phthalic Anhydride in Mizushima

Mitsubishi Gas Chemical (MGC) of Japan has made a strategic decision to suspend the production of orthoxylene and phthalic anhydride at its Mizushima facility from mid-January 2025. This move is accompanied by the sale of the company's 50% stake in CG Ester Corp, marking its departure from the plasticizers business. The reasons behind this significant shift include ongoing unprofitability, aging equipment, and projections of diminishing demand in the foreseeable future.

The decision to halt production stems from a combination of factors, including sustained unprofitability, aging equipment at the Mizushima facility, and forecasts indicating a decline in demand for the produced chemicals. Mitsubishi Gas Chemical is aligning its operational strategy with the evolving market dynamics, ensuring sustainability and adaptability in the face of changing industry landscapes.

Simultaneously, Mitsubishi Gas Chemical announced the sale of its 50% stake in CG Ester Corp, a notable plasticizer manufacturer, to its partner JNC Corp. The transaction is valued at 734 million yen (approximately USD 4.9 million). This move effectively marks Mitsubishi Gas Chemical's exit from the plasticizers business, consolidating its focus on core operations with greater growth potential.

The transfer of shares in CG Ester Corp is scheduled for March 29, 2024, and following this transaction, CG Ester will transition into full ownership by JNC. CG Ester possesses the capacity to produce 70 thousand tons of plasticizers annually, distributed across two production sites in Mizushima and Ichihara.

In response to the change in ownership, CG Ester Corp will cease production at its Mizushima plant by March 2025. However, the company will continue its operations by taking over JNC Petrochemical Corp's Ichihara manufacturing facility, ensuring continuity and efficiency in its plasticizer production capabilities.

Mitsubishi Gas Chemical's decision to exit the plasticizers business and cease orthoxylene and phthalic anhydride production underscores a strategic realignment aimed at fostering sustainability and resilience in a rapidly changing industry. The company is making forward-looking decisions to address current challenges and position itself for future opportunities.

While announcing the production halt, Mitsubishi Gas Chemical acknowledged facing particular challenges related to the use of methanol in ships. The company is actively collaborating with Lloyd's Register, which is classing the ship, to address safety and fuel-related considerations during the construction phase.

To facilitate this ambitious project, Mitsubishi Gas Chemical has secured partnerships with key industry players. Wärtsilä, a leading provider of advanced technologies, will supply dual-fuel 32 engines, contributing to the ship's diesel-electric-methanol dual-fuel system. Additionally, electrotechnical specialists Ortec Santamaria and luxury yacht outfitters De Wave Group are actively involved in bringing the project to fruition.

Mitsubishi Gas Chemical's emphasis on delivering prototypes and its capacity for flexibility set it apart in the shipbuilding industry. The company's ability to adapt to unique projects, such as the creation of the world's first methanol-powered cruise ship, highlights its commitment to innovation and responsiveness to evolving market demands.