Abakan Inc. announced it entered into a memorandum of understanding with Cone S.A. for construction of a manufacturing plant to suit large-scale, clad pipe manufacturing within the new Suape Export Processing Zone (EPZ) in Pernambuco State, Brazil.
The planned four-line plant will be able to produce up to $200 million-worth of clad products annually. The decision to establish a plant in Brazil was driven by the requirements of Abakan’s technology development partner, Petrobras, along with anticipated demand from other Brazilian energy and mining companies.
The plant will be one of the largest metallurgical clad pipe manufacturing facilities in the world, according to Abakan, with the capability of quickly producing large quantities of corrosion- and/or wear-resistant clad pipe. Cone has formed a strategic alliance with FCL Builders, headquartered in Itasca, IL to bring its more than 35 years of industrial construction experience to this partnership.
“The increased demand in Latin America and worldwide for clad pipe to deliver sour crude oil and gas from new and expanded projects such as the Brazilian and West African pre-salt reserves and the Gulf of Mexico, has us very excited about growth potential,” said Abakan CEO Robert Miller.
Architectural drawings are completed and permitting for the site has begun with land preparation scheduled to get underway shortly. Abakan plans to start the installation of its specialty equipment by December. The plant will be built on four acres along with an adjacent storage area. The EPZ offers exemptions from import and export taxes on equipment, materials and operations, with special financial privileges and tax incentives. The Suape EPZ is Brazil’s first privately administered export processing zone.
Construction of the Brazil facility represents the first step in Abakan’s plan to build corrosion-resistant clad pipe manufacturing facilities globally, to meet the rising global demand for corrosion-resistant clad pipe, plates and components used in extracting sour oil and gas resources. More than 80% of oil fields in Brazil are sour.
Abakan plans to establish similar four- to eight-line facilities in Indonesia, the Middle East and North America.