- Methanex Corporation (TSX:MX) says that it will defer roughly C$500 million in capital spending at its Geismar 3 project for up to 18 months
- The project will be placed on temporary “care and maintenance” until market conditions improve
- The company is also reducing its near-term capital spending in other areas by $25 million
- To date, four of the company’s 1,500 employees have contracted COVID-19
- Methanex Corporation (MX) is currently down 3.74 per cent to $16.49 per share, with a market cap of $1.26 billion
Methanex Corporation (TSX:MX) will defer roughly C$500 million in capital spending at its Geismar 3 project for up to 18 months.
The Vancouver-based company is the world’s largest producer and supplier of methanol, with distribution channels extending around the world.
Methanex’s decision to suspend operations comes in the wake of continued uncertainty regarding COVID-19, as well as fluctuating commodity prices and a challenging project environment.
This follows the company’s earlier decision to idle its Titan plant in Trinidad and its Chile IV plant indefinitely.
Geismar 3 is Methanex’s third methanol plant in the US state of Louisiana, and will be placed on a temporary “care and maintenance” schedule until market conditions improve.
Once operational, the project is expected to have a production capacity of 1.8 million tonnes.
John Floren, President and CEO of Methanex, said the company is taking proactive measures to strengthen its balance sheet, while maintaining long-term value and financial flexibility.
“We believe that deferring major capital spending on our advantaged Geismar 3 project, and minimizing near-term spending, is a prudent decision in the current environment.
“We have ample liquidity today with approximately $800 million of cash on the balance sheet and we continue to evaluate all capital and operating spending as we navigate this challenging environment,” he added.
In addition, Methanex has said that it will reduce capital spending in other areas by approximately $25 million.
Separately, the company revealed that four of its 1,500 employees have contracted COVID-19. The workers, who live in three different countries, are reportedly either asymptomatic or recovering, and are self-isolating.
While Methanex says that the virus has not had any material impact on its operations, measures have been put in place to mitigate any further risk.
“While we anticipate lower methanol demand in the near-term based on reduced manufacturing activity, we think it is too early to accurately forecast how long or how extensive the impact of COVID-19, and the resulting economic impact, will be on the methanol industry and on our business,” Floren concluded.
Methanex Corporation (MX) is currently down 3.74 per cent to $16.49 per share at 1:55pm EST.