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Thousands of workers loose job as JG Summit shutdown plant

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BATANGAS – CHINESE New Year brings sad news of loosing their job for thousands workers as JG Summit shut down its petrochemical plant in Batangas City.

Conglomerate JG Summit Holdings Inc. formally announced Thursday that it closed down its P150-billion petrochemical plant due to lingering global slump in demand.

“Given persisting unfavorable market conditions in the global petrochemical industry, JG Summit Olefins Corp. [JGSOC] is now on an indefinite commercial shutdown,” JG Summit said in a statement.

The Gokongwei company further said that while on shutdown, JGSOC would continue to sell from existing product inventory.

But the LPG trading operations of Peak Fuel Corp., a subsidiary of JGSOC, will remain unaffected by the shutdown.

Before the year 2024 ends, JG Summit said it would inject up to P17.1 billion to JGSOC to cover maturing obligations. It also infused P11 billion in 2023.

“JGSOC continues to evaluate various options to mitigate the adverse effects of challenging market conditions, and will make the appropriate decision in due course,” JG Summit said.

The conglomerate has been supporting its petrochemical business over the past few years amid the global slowdown in demand.

The petrochemical business has also been a drag to the group’s performance over the past few years.

JGSOC booked a net loss of P11.4 billion in the first nine months of 2024 due to higher financing costs and additional depreciation from the fully-completed plant expansion. Since 2020, the company’s total losses have amounted to P39.4 billion.

Analysts said the continued weak performance of JG Summit’s petrochemical business has been a factor to the decline in the company’s share price.

Meanwhile, revenues rose 53 percent to P39 billion due to the increased plant operations resulting in higher sales across all products this year.

JGSOC operates the first and only naphtha cracker plant in the country, which produces the olefin raw materials ethylene and propylene used as feedstock by the downstream polymer plants.

Ethylene-propylene copolymer is a class of synthetic rubber produced by copolymerizing ethylene and propylene, usually in combination with other chemical compounds. In addition to elastic properties, ethylene-propylene copolymers display excellent resistance to electricity and ozone and an ability to be processed with a number of additives. They are made into products for use in automotive engines, electrical wiring, and construction.

They are also used in the production of plastic packaging materials, and almost all other plastic products. 

It produces over 1 million metric tons of petrochemical products per year. Last year, JGSOC inaugurated its 160-hectare expanded facility in Batangas City.

JGSOC markets its petrochemical products to over 30 countries worldwide.

Aside from petrochemical business, JG Summit also has investments in property development, airline transportation, food manufacturing and infrastructure.| –  BALIKAS News

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