Transition Industries signs contracts for world's largest green methanol plant in Mexico

Transition Industries signed key construction contracts on June 30 for a $3 billion methanol project in the state of Sinaloa, which is expected to include the largest green methanol plant in the world, according to developers.

The facility, called Pacífico Mexinol and located at the port of Topolobampo, will consume up to 150 MMcf/d of US natural gas to produce 1.8 million mt/year of blue methanol, management said at a Mexico City event. The facility will also produce 350,000 mt/year of green methanol.

The engineering, procurement, and construction (EPC) contract was signed with a consortium between Samsung E&A and Techint Engineering. Italian MAIRE Group will provide the technology for methanol production.

"The design and engineering process will commence shortly aiming to begin construction by the end of 2025, with commercial operations expected in 2029," said Rommel Gallo, chief executive officer at Transition Industries.

Given the strategic location of the terminal on the Pacific coast, the production will be ideally aimed at the markets in Asia as well as the US, although the company also seeks to incentivize the growth of a local market, Gallo told S&P Global Commodity Insights during the event.

Mexico is heavily dependent on imports; in 2024 it imported 1.4 million mt of derivative MTBE from the US, according to Commodity Insights.

Transition is finalizing the contract with the state utility CFE for the supply of natural gas, which is likely to come in both interruptible and firm base, Gallo said.

Methanol can be used as fuel, but most of it is used as feedstock for the production of other chemicals, Balmore Brito, project director told Commodity Insights.

Methanol is one of the seven building blocks that serve as a key enabler to the rest of the chemical industry, as it serves as a feedstock used in both chemical and fuel applications, according to Commodity Insights.

"It is a commodity chemical with a market size of 90 million mt in 2024 and among the most traded liquid chemicals with total trade of around 39 million mt, representing over 40% of global methanol produced," Commodity Insights analysts said in a note.

Transition Industries is already analyzing the possible construction of two more plants in the country if Pacífico Mexinol is successful, Brito said.

"One of them could be adjacent to Pacífico Mexinol, and the other would be located in a different region of the country," Brito said, but declined to be more specific.

The US is a major powerhouse for chemical production, particularly in the methanol value chain. The US became a net exporter of methanol in 2022 and has historically been a net exporter across most key downstream chemicals, including MTBE, acetic acid and vinyl acetate monomer. In 2024, the US exported a little over 2 million mt of methanol and it is expected to export almost 3.5 million mt in 2025, according to Commodity Insights. South Korea imports close to 40% of its methanol requirements from the US while Japan imports less than 1% of its requirements from the US.

The project will be partially financed by the World Bank through its International Finance Corporation (IFC), Gallo said, although a part of the project will also be "equity" from a group of diverse investors, he said.

"This level of gas demand puts Sinaloa on the map as a major industrial consumer," said Sinaloa governor Rubén Rocha Moya during the event.

Pacífico Mexinol is located inside one of the strategic industrial projects included in Mexico's new "Polo de Bienestar" zones, a development initiative supported by President Claudia Sheinbaum's administration to stimulate private investment in underserved regions.

Green methanol is typically priced at 5-6 times that of conventional methanol. Platts, part of S&P Global Commodity Insights, assessed FOB USG methanol at $289.71/mt on June 30.