Lucite International, the former ICI Acrylics business is planning to invest $100m (£60m) in a world-scale monomer production plant in China.
The plant will produce methyl methacrylate (MMA), the building block for a range of plastics including well known brands such as Perspex and Lucite acrylics. Lucite makes about a quarter of the world’s MMA and is an important exporter to China, where consumption is expanding 10 percent per year, which is double the global rate of growth.
Ian Lambert, chief executive, said “A lot of growth in our industry is coming from areas where standards of living are rising.”
The MMA plant would be part of a massive integrated chemical complex that is being constructed at Caojing, south of Shanghai.
The site, which will be one of the world’s biggest chemical complexes, has attracted some the leading European and US chemicals groups, which are seeking to take advantage of low costs in China and access to one of the fastest growing markets. Petrochemical demand in China rose 40 percent from 1998 to 12002 and is expected to double by 2008.
Mr Lambert said “We see a big growth opportunity in China”. The Caojing plant will have the capacity to produce at least 100,000 tonnes of MMA a year, equal to one year’s growth in the market.
The expansion, which will increase Lucite’s MMA output by 14 percent, is being financed through a combination of debt and equity in the company.
Most of the debt is being financed by a consortium of Chinese banks.
Lucite was carved out of ICI in a leveraged buy-out backed by Charterhouse Development Capital and Ineos Capital on 1999. Speculation has been growing that Lucite, which has a turnover of more than $1bn and which – in Perspex and Lucite- owns two of the best-known brands in polymers, may soon be for sale.
It is being advised on the MMA expansion by the Industrial and Commercial Bank of China.
Source: Financial Times
Author: David Finn