Business & Finance Club Magazine - Industrial Sector - Dubai: Abu Dhabi-based polymer manufacturer Borouge, which is developing the world's largest integrated polyolefins site in Ruwais, Abu Dhabi, said yesterday it has signed an agreement to build a second production plant in Guangzhou, China, with a capacity of 105,000 tonnes of compounded polypropylene resin per annum.

Construction expected to be completed by the middle of 2012. The company did not divulge the investment outlay for the plant.

The announcement closely follows the inauguration of Borouge's first compounding plant in Shanghai on April 20, and "presents the opportunity for the company to strengthen its presence in China", the company said in a statement.

The new compounding plant will also benefit from the Application Research and Development Centre being established in Shanghai and the Innovation Centre being built in Abu Dhabi.

Borouge is expanding its presence in the Chinese chemical market by investing nearly $400 million (Dh1.47 billion) in three projects, according to earlier reports. The company is setting up a plant and two logistics centres in Shanghai and Guangzhou.

The $60 million Shanghai plant will mainly produce plastics products for the automotive, infrastructure and packaging sectors. The company is also planning a research and development centre in Shanghai.

The latest announcement is in addition to the earlier announced investments.

"It is our intention to be a reliable supplier to the rapidly growing automotive and appliance industries in China and therefore we have decided to invest in a second compounding plant that produces tailor-made resins in close proximity to our customers," William Yau, CEO of Borouge's Singapore-based marketing company, said following the signing ceremony in Guangzhou.

According to Belgium-based PlaticsEurope, global plastic resin consumption is expected to touch 562.2 billion pounds by the end of this year, of which 42 per cent is in the Asia Pacific region, followed by 23 per cent in Europe and 21 per cent in North America.

The Middle East and Africa, which is one of the world's largest producers of oil and gas — the primary source of petrochemicals and plastics — consumes the lowest, only 6 per cent, while the rest of the world consumes the rest, 8 per cent.

The move will help the UAE manufacturer reinforce its position as a major player among petrochemical suppliers in the Asia Pacific region that is driving the global demand for polymer products.

Business development

Borouge's investment indicates energy companies in the Gulf are making increasing efforts to develop downstream business.

Saudi Aramco set up an integrated oil refining and petrochemical complex in China along with ExxonMobil and Sinopec in Quanzhou, Fujian province, last November.

The facility has a total investment of around 40 billion yuan. It can produce 7.46 million tons of refined oil, 1.28 million tonnes of plastics and huge amounts of other chemical products.