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Saudi: SABIC Raises Share in Ar-Razi Company to 75%

Saudi: SABIC Raises Share in Ar-Razi Company to 75%
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Saudi: SABIC Raises Share in Ar-Razi Company to 75%

Saudi: SABIC Raises Share in Ar-Razi Company to 75%

Saudi Basic Industries Corporation (SABIC) signed on Wednesday an agreement to extend its joint venture with the Japan Saudi Arabia Methanol Company (JSMC), renewing its partnership with the Saudi Methanol Company (Ar-Razi) for another 20 years.

Under the agreement, SABIC will raise its stake in Ar-Razi to 75 percent by buying half of JSMC’s share in the company – which makes up 25 percent of all Ar-Razi shares.

The previous agreement, which expired on November 29, 2018, gave SABIC the right to buy JSMC’s share in Ar-Razi after the end of the partnership contract.

The agreement stipulates that the Japanese company will pay more than five billion Saudi riyals ($1.3 billion) to SABIC for the extension of the partnership.

SABIC, for its part, will use this amount or part of it to maintain and upgrade the operational efficiency of existing Ar-Razi plants or to build a new plant.

It will become an equal co-owner in a new more efficient methanol production technology to be commercialized.

JSMC is also entitled to sell its remaining 25 percent stake in Ar-Razi to SABIC, worth more than SR562 million ($149.8 million) before the end of March. If this happens, it will become all owned by SABIC.

Subject to regulatory approvals, the transaction is expected to be completed in 2019 where the financial impact will start, SABIC said, adding that it will announce that accordingly.

Notably, Ar-Razi was established in November 24, 1979, jointly by SABIC and JSMC. It is focused on the development, establishment, ownership and operation of a methanol complex.

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Leading Garment Producer Bangladesh Holds Crisis Talks on US Tariffs

Textile and garment production accounts for about 80 percent of exports in Bangladesh. Munir UZ ZAMAN / AFP/File
Textile and garment production accounts for about 80 percent of exports in Bangladesh. Munir UZ ZAMAN / AFP/File
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Leading Garment Producer Bangladesh Holds Crisis Talks on US Tariffs

Textile and garment production accounts for about 80 percent of exports in Bangladesh. Munir UZ ZAMAN / AFP/File
Textile and garment production accounts for about 80 percent of exports in Bangladesh. Munir UZ ZAMAN / AFP/File

Bangladesh's interim leader called an emergency meeting on Saturday after textile leaders in the world's second-largest garment manufacturing nation said US tariffs were a "massive blow" to the key industry.Textile and garment production accounts for about 80 percent of exports in the South Asian country, and the industry has been rebuilding after it was hard hit in a revolution that toppled the government last year, said AFP.

US President Donald Trump on Wednesday slapped punishing new tariffs of 37 percent on Bangladesh, hiking duties from the previous 16 percent on cotton and 32 percent on polyester products.

Bangladesh exports $8.4 billion of garments annually to the United States, according to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the national trade body.

That totals around 20 percent of Bangladesh's total ready-made garments exports.

Interim leader Muhammad Yunus "convened an emergency meeting... to discuss the US tariff issue," the government said in a statement.

Sheikh Bashiruddin, who holds the commerce portfolio in the government, told reporters after the meeting that Yunus "will raise the issue with the US administration".

Bashiruddin said he believed Bangladesh would "not be severely affected", adding that some other competitors faced "much higher than those on us".

Yunus' senior advisor Khalilur Rahman said the government had been readying for the tariff hike, and had begun talks with US officials in February.

"I have already spoken with several State Department officials," Rahman said on Saturday.

"The discussions are ongoing. We will take the necessary steps based on these discussions."

Bangladesh's tax authority, the National Board of Revenue, is also expected to meet to review the fallout from the tariffs.

Rakibul Alam Chowdhury, chairman of RDM Group, a major manufacturer with an estimated $25 million turnover, said on Thursday that the industry would lose trade.

"Buyers will go to other cost-competitive markets -- this is going to be a massive blow for our industry," he said.

Several garment factories produce clothing for the US market alone.

Anwar Hossain, administrator of the BGMEA, has told AFP that the industry was "not ready" for the tariff impact.

Bangladesh, the second-largest producer after China, manufactures garments for global brands -- including for US firms such as Gap Inc, Tommy Hilfiger and Levi Strauss.