Mitsubishi announces termination of proposed petrochemical plant in Louisiana

Yesterday, Mitsubishi announced that it has resolved to terminate consideration of a new methyl methacrylate (MMA) monomer plant in Geismar, Louisiana. Many of the reasons the company cited for doing so were first detailed in IEEFA’s July 2024 report about the risks of the plant, which had already been delayed at the time of the report.

Mitsubishi decided to discontinue the plant in part because of “the prospect of meeting immediate demand with existing MMA monomer manufacturing facilities in Tennessee and elsewhere and the failure in negotiations with customers to obtain long-term commitments on transactions after the execution of the Investment Plan based on increases in capital investment stemming from inflation and other factors”.

In its report, IEEFA stated that the MMA market is oversupplied both in the U.S. and globally. New capacity additions, like the Geismar project, were likely to lower the utilization rate of U.S. MMA producers—an impact that reflects oversupply and with it, flat pricing and tighter margins. Additionally, the global economy is growing at a much slower rate than when the Geismar plant was planned in 2014 and slow growth in the current paradigm impairs profits. Mitsubishi’s announcement confirms IEEFA’s findings.

In its statement announcing the cancellation of the plant, Mitsubishi also cites that the Group expects to record a loss of approximately 20 billion yen in the third quarter of the fiscal year ending March 31, 2025, and thereafter due to impairment losses on expenses incurred to date for the Investment Plan.

At the time of the report, IEEFA questioned whether Mitsubishi’s overall decision about the Investment Plan would reflect the company’s commitment at the highest levels to sustainability, human rights and investors. This decision to terminate consideration of the Geismar plant reflects a prudent decision in the energy transition.