World's largest rubber plant to be built in S'pore

World's largest rubber plant to be built in S'pore
By Lois Calderon | Posted: 01 June 2011 2321 hrs

SINGAPORE: German chemical maker Lanxess is investing some S$350 million in Singapore to build the world's largest manufacturing plant for neodymium polybutadiene, a specialised rubber.

This synthetic rubber material is used for the manufacture of high performance and eco-friendly tyres.

The move comes as the company rides on the booming tyre market in Asia.

Lanxess estimates the eco-friendly tyre market would grow by an annual nine per cent globally.

Just one year after breaking ground for its butyl rubber plant in Jurong Island, Lanxess is giving its large-scale investment a follow-through.

The German-listed company is building a facility that will annually produce 140,000 metric tons of a new type of synthetic rubber.

This material is then used to make "green tyres" that can reduce fuel consumption and carbon dioxide emissions.

That production capacity is about a fifth of the 800,000 metric tons per annum produced by Lanxess' six manufacturing plants globally.

It said Singapore would be a strategic location to serve the environment-friendly and fast-growing "green tyre" market in the region.

Asia accounts for about 50 per cent of global demand for synthetic rubber.

Lanxess managing director Ian Wood said: "In Asia, there's voluntary scheme already in force in Japan, in terms of tyre labelling.

"South Korea is due to bring in some mandatory regulations and we believe countries like China and India will probably move in this direction in the next two to three years as well."

The move is also consistent with the company's target of growing its earnings before interest, taxes, depreciation and amortization, by roughly 80 per cent -- or about 1.4 billion euros -- in 2015.

Lanxess head of business unit performance butadiene rubbers Joachim Grub said: "Asia is a cornerstone of our medium-term growth and also our medium-term profitability targets of the company.

"It will be satisfying the increasing demand especially in this region for performance of our products".

Lanxess is hiring 100 people for the new facility, which is expected to be up and running by the first half of 2015.

Its butyl rubber plant on Jurong Island Chemical Park employs 180 people.

The company is currently recruiting 200 more staff for the first plant, which should be completed by the first quarter of 2013.

Capital Economics economist Vishnu Varathan said the fresh investments should help Singapore's bid to move up to high-value manufacturing.

"Moving up the value chain essentially means there will be restructuring taking place… But I don't think it (Lanxess investment) is going to have immediate impact or very strong one-off impact on GDP in the near future. The horizon is quite... far," he said in a phone interview.

-CNA/wk

- wong chee tat :)