Economic reforms kill ICI offshoot

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ECONOMIC reform in Argentina is forcing Imperial Chemical Industries, the chemicals group, to put its PVC operation there into liquidation at a cost of pounds 30m, writes Heather Connon.

Electroclor, which is 60 per cent owned by the ICI subsidiary Duperial, is one of Argentina's leading PVC suppliers. But it has been suffering from a flood of cheap imports from areas including the Gulf states since the government removed tariffs and other trade barriers in 1991.

Its problems have been exacerbated by the high price of raw materials such as ethylene - where manufacture is controlled by the Argentinian government - which means it has been unable to match the price of imports.

ICI would not comment on the losses, but analysts estimate they have been about pounds 10m a year for the past three years. The pounds 30m charge, to be made in the 1993 accounts, is largely for asset write-offs and redundancy payments.

The liquidation is subject to a vote by shareholders, although ICI's 60 per cent stake is large enough to approve the proposal. Electroclor is publicly quoted and has a number of individual shareholders. But its share price has collapsed from dollars 14 to 59 cents.

The economic reforms have not damaged all businesses. Zeneca, the pharmaceuticals business spun off from ICI in the summer, has drugs and agrochemicals operations in Argentina which continue to perform well. Duperial also has other chemical operations.