The planned construction of a net petrochemical project of one billion dollars zero net near Edmonton will be delayed as the chemical firm Dow Inc. seeks to keep cash in the midst of unfavorable market conditions, the company said Thursday.
Dow’s path2zero installation, which will be built in Fort Saskatchewan in Alberta’s industrial heart, was announced for the first time in 2021 and obtained the financial support of federal and provincial governments in 2023.
The $ 8.9 billion project in neutral in carbon was promoted as the first site of ethylene crack and integrated net emissions of the world. Their plans to boost ethylene production involved building a new installation and modernizing an existing plant.
Dow Inc. said Thursday that expects an extended pressure on profits, since the uncertainty of Donald Trump’s erratic commercial policies adds to macroeconomic volatility.
The construction will be delayed until market conditions improve, said CEO Jim Fitterling in a subsequent call to profits.
“This decision supports our short -term cash flow and adjusts the project time to align with market recovery,” said Fitterling. “We remain committed to the long -term strategic justification of the project and the growth of growth that will allow in specific applications such as pressure pipe, cable and cable and food containers.”
The company said it focused on ensuring that project yields are higher than its cost of capital. “And that is why, now is the time to delay construction before spending ramps.”
With the stagnant project, Dow expects its total business capital spending for 2025 to be $ 2.5 billion, compared to its original $ 3.5 billion plan.
Dow, along with other chemical companies, has been fighting higher raw material and energy costs along with the weak demand and prices of its products, especially in markets such as Europe.
The company said it hopes to see delays in purchasing and investment decisions, both of consumers and corporations, until negotiations on tariffs are completed.
The construction would begin in 2024, and it is expected that phase one will be completed by 2027 and phase two in 2029.
Dow committed to the project
According to Dow spokeswoman, Sarah Young, the site preparation work, including public service companies, energy and infrastructure, has been underway since last year. The construction of administrative buildings is almost carried out.
Young said the company intends to continue engineering and acquisition so that the site is ready when construction rises again.
“We will continue the preparation of the site and the bases such as cash flow, while working in the coming months to reproach the project accordingly,” he wrote.
“We are committed to complete this project and work constructively with all our partners.”
The United States headquarters said it chose Alberta for the project because it offers competitive costs in costs, as well as with cost advantage, ethane, a key raw material for ethylene production.
“Our industry is in one of the longest cycles in decades,” said Fitterling.
“Now, with the uncertainty around where the tariffs are going to land, with the impact that is having at the request, that is driving our shortest for a longer time [earnings] perspective.”
The expansion project would have produced and supplied around three million tons of low -carbon zero carbon polyethylene and ethylene derivatives and ethylene derivatives for customers around the world, according to Dow.
The Alberta Petrochemical Incentives program has committed approximately $ 1.8 billion to the project. The Federal Government will contribute up to $ 400 million of the carbon capture investment, carbon use and storage of Canada, as well as the fiscal credit of clean hydrogen investment.
A spokesman for the Minister of Energy and Minerals, Brian Jean, said in a statement that he encouraged the government to see that Dow still considers that Path2zero is a “key corporate priority.”
“This project is very important for Alberta and our economy, and to show that Alberta is the best place in the world to build low -emission energy and petrochemical projects.”
‘Breath deep’
Fort Saskatchewan officials were adopting an approach measured in reaction to the news.
The mayor of Fort Saskatchewan, Gale Katchur, said the project does not stop, is only moving at a slower pace at this time. She said that some people are incorrectly assuming that the project closes forever.
“We have to give guarantees to the people that the words that I am listening to their sites administrator is that it is purely a slowdown in construction,” Katchur said.
Katchur said adding additional months or one year to the schedule for such a massive project is not significant.
Colin Fagnan, executive director of Fort Saskatchewan and the Lamont County Chamber of Commerce, echoed Katchur’s guarantees.
“I don’t think this is a project that can be stopped,” he said. “This is something that involves many partners, including the government.
“Although there may be a slowdown, so many things is happening in our region that it is really a proof of concept that yes, in Alberta, we can produce hydrogen, we can produce it on scale … I think there is a real appetite for this hydrogen abroad.”
An Alberta economist said he expects the delay to be shortly while Dow expects to see how project costs will be affected by the current economic uncertainty.
However, the project in the long term should not endanger, said Charles St.-Arnaud, chief economist of Alberta Central, a central banking center and a commercial association for Alberta credit cooperatives.
“Companies postpone investment, cancel investment and that is what will be the greatest success for the economy nationwide,” he said.
“But when we see it here in Alberta … companies are much more cautious than they were and prefer to be prudent than to move on and have greater losses later.”
According to Young, there are 250 Dow employees and 1,200 contractors working on the site. Currently they are not being considered dismissals, he added.
