• Erdemoğlu Holding Chairman İbrahim Erdemoğlu announced that SASA aims to transform Türkiye into a regional production and supply hub, an alternative to China, with its planned 25 billion dollars worth petrochemical and refinery investment in Yumurtalık.

In a press conference, İbrahim Erdemoğlu, Chairman of the Board of Erdemoğlu Holding, made important statements regarding the future goals of Erdemoğlu Holding and SASA, and the planned petrochemical and refinery investments in Yumurtalık.
Starting his speech with assessments of SASA's debt structure, İbrahim Erdemoğlu said, "Looking at SASA's debt, our calculation is to bring the leverage ratio to approximately 4 by the end of 2026. We need to prepare the company for the refinery investment in Yumurtalık. Therefore, the leverage ratio should be much lower by 2027."

"An alternative production base to China is essential: Only Türkiye remains"
Reminding that Türkiye imported approximately 23 billion dollars worth of petrochemical products last year, Erdemoğlu made the following analysis based on global strategies and the world conjuncture:
"However you define America's long-term strategy, if there is a strategy to confine China more to the Asian region in the mid and long term, an alternative production base is needed in our geography for this to be implemented. Who could this production base be? Looking at the world conjuncture, it cannot be Russia. Europe's current structure is not suitable for this. The Balkans do not have sufficient scale.
Roughly three countries stand out in this region: First, Türkiye, second, Iran, and third, to a more limited extent, Egypt. If you cannot have some of the products that China produces today produced by other countries in this geography, you cannot create an alternative to China's production power. Despite the numerous protections provided to Egypt and the advantages given by America regarding customs duties, it has not yet been able to achieve the desired industrial transformation. Iran's current and future problems are evident. Therefore, according to our prediction, only Türkiye remains. We may be wrong, this is our prediction, but in the picture we see, there is no strong alternative other than Türkiye."

"Türkiye will be the production center and 'big brother' of the region"
Touching upon the future production balances in the region, Erdemoğlu said regarding the role Türkiye will undertake, "So, will only Türkiye carry out the manufacture? No. According to our prediction, Türkiye will assume a kind of pioneering, central, or 'big brother' role in the region. Syria, Iraq, Jordan, and Egypt will be around it. Türkiye will be the central country in the production and supply system of this geography. This idea underlies the main plan we created about eight years ago and the idea of ​​the approximately 25 billion dollars investment in Yumurtalık."

Logistics Costs and Ceyhan's Strategic Location
Erdemoğlu emphasized that logistics costs and economies of scale will be the most critical issues in global competition within the next 5 to 10 years, and listed the reasons for choosing Yumurtalık as follows:
"Compared to a product you would send from Yumurtalık to Ankara, Syria is much closer. Compared to a product you would send to Istanbul, markets such as Iraq and Egypt can become much closer in terms of logistics. Yumurtalık is practically in the center of this geography.
There is a second factor that strengthens this: There are oil and natural gas resources in the Eastern Mediterranean. Where will these go? A significant portion of them will be transported through Türkiye. Ceyhan is very important here. As an energy hub where the oil in the region, Azerbaijani oil, and hydrocarbons from different sources converge, the importance of Türkiye, especially the Ceyhan-Yumurtalık region, can increase. Our expectation here is not short-term, but a medium and long-term perspective."

33 Million Square Meter Chemical Specialization Zone
Noting that the government has made a significant move in Yumurtalık, Erdemoğlu stated that a 33 million square meter specialization chemical industry zone has been allocated behind their lands through studies conducted by the Ministry of Industry and Technology for approximately five years. He added that investors have not been attracted to the region until now, but that this will change with SASA, and continued as follows:

"There were ideas like establishing an organized industrial zone, attracting investors, and relocating some industries from Marmara here. However, investors didn't come because the region lacked sufficient fundamental advantages to attract producers. Now, after SASA establishes its petrochemical investment and refinery here, the situation will change. Because the raw materials needed by chemical companies will be produced right next to them. We believe that chemical companies will also come to this region in time.
We have also clearly placed our request regarding Yumurtalık, we want 10 million square meters of the 33 million square meter area as SASA in the second phase. We are interested in one-third of the region. If Türkiye currently imports 23 billion dollars worth of petrochemicals, and if this region truly becomes a production hub, we estimate that the required production volume could reach 70-80 billion dollars in the future. Therefore, SASA's investment alone will not be sufficient, a larger industrial ecosystem is needed."

"We need to establish the Chinese mentality"
Emphasizing that an integrated production model is essential to compete with European manufacturers, Erdemoğlu said, "Germany has chemical giants, but the main issue for us is to create a structure similar to the one China has established. Does oil come to Ceyhan? Yes, it does. When you build the refinery there, you eliminate transportation costs and freight problems. You produce the raw materials there, and you produce the chemical products in the same region. You add a port next to it and export the product directly. It is not easy for European companies to compete in terms of cost against such an integrated structure."

Touching on the importance of economies of scale, Erdemoğlu explained the reason why exports to America cannot be made at the desired level with the following words: "When a retailer in America wants to buy home textiles, they don't want to go around to 20 different companies in Türkiye, they want to meet all their needs from a single producer. China can achieve this with economies of scale and a single supply chain. Without achieving scale, lasting competition is very difficult."

Foreign Partnership Negotiations
Stating that the project is a national goal rather than a commercial investment, Erdemoğlu emphasized, "What we want to do here is not just to increase the profitability of a company. It is not an investment that we look at only from the perspective of our personal interests. In our understanding, there is the country, the government, the nation. This is the main source of the strategy."
Regarding the financing of the investment and partnership negotiations, he gave the following details:
"Last year we made an agreement with Vitol. Apart from that, there are other organizations that want to participate in the project. Previously, there was interest from the Qatari side, at one point, the Saudis and Aramco were also interested, but developments in the Gulf affected the processes. If other partners participate, it may be possible to bring the 10-15 year timeline forward. The master plan, technology, what it will produce, and the land for our 20-25 billion dollar investment have been ready for about four years. However, due to today's economic conditions, we will start the project after the partnerships or financial solutions are completed."

Political Infrastructure and Regional Division of Labor
Referring to the President's statements on regional brotherhood and Türkiye's position in foreign policy, Erdemoğlu concluded his assessments regarding the political dimension of the process as follows:
"Our President used an expression emphasizing brotherhood between Turks, Kurds, and Arabs about a year ago. We see this as important in terms of the political infrastructure for Türkiye to assume a stronger central role in the region in the medium and long term. In other words, we think that the issue is developing not only economically but also politically in this direction. Today, Türkiye has a much more central and guiding role in its relations with Syria and Iraq than in the past.
In this geography, countries such as Syria, Iraq, Jordan, and Egypt can eventually take on a role in the production of goods for lower and middle-income groups, including textiles. Türkiye, on the other hand, can gradually move to a higher level of high-tech and value-added production. If you cannot create the raw material production that this entire geography will need, you cannot truly turn the region into a production base, and the goal of creating an alternative to China will not be achieved. The developments, signs, and legal regulations we have seen in the last six months strengthen our expectation that this way of thinking can be put into practice."

Source: CNBC-e