Tronox-Cristal merger likely to be finalized in Q3: Tasnee CEO

The planned merger between Tronox and Cristal is expected to be complete in Q3 2018, Mutlaq Al-Morished, chief executive of National Industrialization Co. (Tasnee), told Argaam in an exclusive on Monday.

Tronox’s plan to acquire the titanium dioxide (TiO2) business of National Titanium Dioxide Ltd. (Cristal) has faced regulatory challenges in the US and Europe on antitrust grounds.

The US Federal Trade Commission (FTC) filed a complaint against the move earlier this month, even as the European Commission approved the deal on certain conditions, namely that Tronox divest a paper-laminate product grade produced in the Netherlands.

Tronox on July 16 announced that it would divest the product grade to UK-based Venator in line with the conditions set out in the EC approval. Tronox also entered into a binding memorandum of understanding (MoU) with Venator to sell Cristal’s Ashtabula, Ohio, two-plant TiO2  production complex to Venator if its divestiture is required in order to proceed with the Cristal acquisition.

Commenting on the potential sale of Cristal's Ashtabula complex, Al-Morished said the company would negotiate with the US FTC in this regard.

“Only one line or plant might be sold, and if we have to, we’ll sell the two-plant TiO2 production complex that has a production capacity of about 200,000 tons per year."

Proceeds from the sale will go to the combined entity, he added.

When asked whether the whole deal will be re-evaluated, Al-Morished said, "It is illogical to evaluate the entire company by the best or worst assets."

The Ashtabula complex is one of the best assets in terms of production, technology and its prime location in the United States. However, it cannot be compared to other assets in Brazil or Australia, Al-Morished said.

Tasnee and Tronox's asset sale plan comes in compliance with the requirements of US and EU regulators, in order to finalize the merger.

The sale option has been already taken into account, he added.

Meanwhile, Al-Morished attributed Tasnee's strong earnings in the second quarter to higher profit share from affiliates and joint ventures, due to an increase in the average prices of most petrochemicals of polyethylene and polypropylene.

Tasnee reported a four-fold year-on-year jump in second quarter net profit to SAR 395.8 million. Net profit came in at SAR 757.2 million for the first half of 2018, rising sharply from SAR 196.9 million earnings posted in the same period last year. The increase was attributed to a rise in average sales prices of TiO2 products and lower financial charges.

Going forward, Al-Morished said he expects TiO2 prices to gradually decrease on subdued demand.

Meanwhile, Tasnee’s titanium slag smelter facility (slagger) is expected to commence trial operations in the first and second furnaces during H2 2018 and H1 2019, respectively, he added.

In May, Tasnee’s subsidiary Advanced Metal Industries Cluster Company Limited (AMIC) signed an option agreement with Tronox to sell 90 percent ownership in its titanium slag smelter facility (slagger) in Jazan City, Argaam reported.

Elsewhere, work is underway  at the titanium sponge project in Yanbu, which is planned to start production in the second half of this year.

Most production lines of the firm’s manufacturing industries in Hail have been operational and their impact is expected to show on the company’s results next year, Al-Morished said.