The firm said the move will connect their US manufacturing operations with cost-advantaged feedstocks available from increasing supplies of shale gas in North America.
The news comes days after Dow announced it is to sell two units that play a role in packaging as part of a divesture plan targeting $1.5bn in 18 months.
New facilities
Capacity at the sites will be targeted at projected growth in North and South America and supporting export opportunities.
Dow said it is exploring specific location options on the US Gulf Coast, with final details to be determined later.
Production units include High Melt Index (HMI) Elastomers for Dow’s AFFINITY brand of hot melt adhesives, ELITE enhanced polyethylene for high performance flexible packaging and hygiene and medical applications and specialty low-density polyethylene (LDPE) to serve demand growth in areas including packaging.
Dow expects the Performance Plastics facilities will employ up to 3,000 workers at construction peak and will utilize building block materials from a ethylene production facility slated for start-up in 2017.
“These new facilities will include a wide range of technologies that will produce differentiated, high performance materials for the fastest growing segments in Dow’s existing markets, while providing access to new markets and applications,” said Jim Fitterling, Dow executive vice president.
“These investments are also aimed at businesses that have consistently delivered a higher return on capital, which is clearly aligned with our long-term strategy.
“This, coupled with an enhanced market and value chain focus in our high value Performance Plastics franchise, will deliver faster growth with lower earnings volatility.”
Dow to supply JV
Dow also announced an initial agreement for a long-term ethylene off-take arrangement with a joint venture to be formed between Idemitsu Kosan Co., and Mitsui & Co., of Tokyo, Japan.
Idemitsu and Mitsui will join to construct and operate a Linear Alpha Olefins unit on the US Gulf Coast.
The JV will utilize an integrated supply of ethylene from Dow’s US Gulf Coast production grid to produce Linear Alpha Olefins used as comonomers throughout Dow’s Performance Plastics franchise.
Plans to construct an ethylene facility at Dow Texas, that will be the primary supplier for the joint venture, are also on track, said the firm.