Synthetic rubber plant gives Singapore more bounce
Lanxess's $834m facility will supply to tyre makers in Asia
Ronnie Lim, Business Times 27 Feb 08;
(SINGAPORE) Singapore has landed the world's first entirely-new butyl or synthetic rubber plant investment since 2000.
'It's the right time to have a plant here,' Lanxess chairman Axel Heitmann said, after the German chemicals group - formerly Bayer - announced yesterday a massive 400 million euro (S$834 million) investment in a state-of-the-art Singapore facility.
The move, marking Lanxess's largest-ever investment, culminates its three-year-long global search for an appropriate site. Singapore won out over Map Ta Phut in Thailand and Kuantan in Malaysia, its two closest contenders.
'All the products from Singapore will go to Asia,' said Mr Heitmann. The big customers will include tyre makers in Asia, which accounts for over half of global demand for synthetic rubber.
The German chemicals group said that the overriding factor in Singapore's favour was the ready supply of higher olefins needed by its speciality chemical plant.
These will become available from 2010 or 2011, thanks to the upcoming new Shell and ExxonMobil petrochemical complexes here which will help create the critical mass needed to produce sufficient quantities of these C4 and higher fractions.
Ron Commander, head of Lanxess's butyl rubber unit, said that the Singapore plant has already finalised a long-term agreement with Shell Chemicals which will provide it with isobutene and Raffinate 1 feedstocks from its Bukom petrochemical complex.
Other factors which favoured Singapore include its political stability, its free market economy, excellent IT and shipping connections, and the high level of research and development activity, Mr Heitmann told an international media conference here.
Lanxess's choice of the site for its butyl rubber plant was earlier expected to be announced last December, but there had been complete silence until now. It finally came down to an 'official site competition' among the three short-listed countries, he said.
Lanxess's 100,000tonnes per annum (tpa) Singapore plant, producing two key products - halobutyl and regular butyl rubber - will help it meet the rapidly-growing Asian demand from tyre manufacturers including Michelin, Goodyear and Bridgestone, which use the products to make inner liners and inner tubes for high-performance tyres.
Halobutyl, the 'next generation' butyl rubber, helps to make tyres safer - by preventing them from deflating regardless of speed - and last longer.
Mr Heitmann said that with the China market growing at 6 per cent and India at over 8 per cent a year, production from its 135,000-tpa Canadian plant and 130,000-tpa Belgian plant would be insufficient for Asia.
Construction of the new plant, on a 20,000-square metre site at Tembusu sector on Jurong Island, will involve over 1,500 workers and 150 engineers.
Detailed engineering has begun and construction proper will start in the first quarter of next year. It is scheduled to be completed by end-2010. When operational, the plant will create an initial 200 jobs.
Singapore wants more speciality chemical makers to set up here.
Aw Kah Peng, Economic Development Board assistant managing director, said that Singapore's strategic intent is 'to further extend the higher olefins chemistry chains on Jurong Island'.
Upcoming new petrochemical crackers, which will double Singapore's ethylene output to 4 million tpa by 2011, will allow the chemical industry here to move a big step forward in value-add, she added.
'This is possible because new chemistry chains are being introduced downstream, resulting in the production of more speciality and higher-value chemicals and polymers,' she said, adding that the Lanxess project was an example of this.
