IEEFA report points out: The multi-billion dollar Mitsubishi Chemical plant has economic problems

The Japanese conglomerate Mitsubishi will build a $1.3 billion chemical production facility in Louisiana that is economically problematic and unnecessarily increasing greenhouse gas emissions, according to an energy think tank report released on the 22nd.

The report by the Ohio-based nonprofit Institute for Energy Economics and Financial Analysis (IEEFA) said Mitsubishi's proposed plant is "the wrong project, built at the wrong time and place, and the financial situation is also very bad."

Mitsubishi Chemical Group will be able to produce 350,000 tons of methyl methacrylate (MMA) per year, a chemical ingredient found in cement, adhesives, textiles and plastics.

The facility will also be one of the state's 50 largest sources of greenhouse gas emissions, according to the Environmental Protection Agency. The facility is being built in Ascension Parish, which is located along the Mississippi River between Baton Rouge and New Orleans and is known as "Cancer Alley" due to its severe industrial pollution.

The IEEFA report noted that even with alternative production processes that are less dependent on fossil fuels, the facility would still emit more than 780,000 tons of carbon dioxide per year.

Mitsubishi said in 2022 that its proposed plant in Louisiana "achieves the lowest carbon footprint for MMA production." The proposed plant's natural gas-based production process is also intended to help the industry move away from the dominant cyanide-based production method.

But IEEFA said Mitsubishi does not need to choose between cyanide or natural gas to produce chemical ingredients because there are other options: technologies based on alternative biofuels are already viable and have been adopted elsewhere by Mitsubishi and its competitors.

The IEEFA report said market conditions and economic viability for the plant have also deteriorated. Construction costs have increased, prices for chemical ingredients have flattened, and growth forecasts have been reduced compared to when Mitsubishi began planning the plant in 2014.

Tom Sanzillo, IEEFA’s director of financial analysis and a former deputy comptroller of New York, said the global methyl methacrylate market will be oversaturated by the time the plant begins operating, expected in 2028.

The analysis estimates that U.S. producers will need to increase their methyl methacrylate capacity to more than 1.2 million tons with production at only two-thirds of that.

“The U.S. market is not expected to expand beyond its historical norm,” the report states.

IEEFA noted that the Mitsubishi plant is unlikely to find sales for its methyl methacrylate in China, the largest consumer and producer of the chemical ingredient. Earlier this year, Mitsubishi closed a methyl methacrylate plant in Hiroshima, citing oversupply in China.

Europe and the Middle East also face market uncertainty due to ongoing wars in Ukraine and Gaza, the report said.

Mitsubishi Chemical Group representative Eri Nishumata declined an interview request on behalf of the company, saying “a final investment decision has not yet been made.” Mitsubishi did not respond to a request for comment on the IEEFA analysis.

Mitsubishi received an estimated $17 million in tax breaks from the Louisiana government for its first year of operations, but the start date has been pushed back after multiple delays. Sanzillo said he believes the company is waiting to see if market conditions improve before moving forward.

“The company is using the government as a speculative tool right now,” he said. “You shouldn’t be doing this with subsidies, you should be continuing to provide subsidies.”

The Louisiana Department of Environmental Quality said in a February bulletin that the Mitsubishi plant is not expected to have “significant adverse effects on soil, vegetation, visibility or air quality in the area where the plant is located.”

Environmental groups have pointed out that the facility will emit hundreds of tons of pollutants that can cause health hazards, including respiratory infections, lung cancer and stroke. A public hearing on the facility’s air permit in February was met with strong opposition from some community members, while others praised the expected jobs and economic benefits.