Lanxess brings forward new rubber facility project in Singapor

01-20-2010: LANXESS has brought forward its plans to build a new butyl rubber facility in Singapore. The company will hold a groundbreaking ceremony in May, 2010, and production is expected to start in the first quarter of 2013. The 100,000 tons per annum plant on Jurong Island will require an investment of up to EUR 400 million (575 million USD).

The plant will help serve the rising demand for tires that is being driven by the trend towards greater mobility, in particular among the growing middle-class in countries such as China and India. In addition, the distinct properties of butyl rubber make it an important product of choice for the pharmaceutical industry, in particular in Asia.

“We are excited to be restarting this project, which will create the world’s most modern butyl rubber plant,” said LANXESS Board of Management Chairman Axel C. Heitmann. “This investment – the largest in our five-year history – underlines our commitment to synthetic rubber, our customers and the future growth markets in Asia.”

In June 2009, LANXESS postponed the production start of the plant until 2014 due to the effects of the global economic crisis. This led to a period of de-stocking and high volatility of customer ordering. However, demand has stabilized in the last six months and the global butyl rubber market is expected to grow again annually by an average of more than three percent in the coming years. LANXESS’ two existing butyl rubber production facilities in Zwijndrecht, Belgium, and Sarnia, Canada, are currently running at high capacity rates.

Global tire sales are expected to return to pre-crisis levels in 2011 as the tire replacement market and new vehicle production levels gradually recover. In order to meet this growing demand, LANXESS’ customers - the world’s leading tire manufacturers - are planning capacity expansions in the BRIC markets.

LANXESS will lease about 200,000 square meters of land from the JTC Corporation, an authorized agent of the Singapore Ministry for Trade and Industry, to build the plant. The neighboring petrochemical refinery belonging to Shell will supply the feedstock for the key raw material isobutene to LANXESS’ rubber plant as part of a long-term agreement. In addition, the company will create about 200 highly-skilled jobs for the new facility and plans to fill the majority of positions locally.

A complete evaluation of the existing process to manufacture butyl was carried out for the new Singapore facility and a radical redesign will be implemented. The process will be best in class. As a result, the butyl plant will be more energy and resource efficient as well as environmentally friendly.

Additionally during 2010, LANXESS will relocate the global headquarters of its Butyl Rubber business unit to Singapore from Fribourg, Switzerland, in order to better serve the rising demand in Asia. The headquarters, including all global management functions such as marketing, controlling and supply chain, will have about 35 employees initially. More than half of the company’s butyl rubber sales are currently generated in the Asia region, with especially China, India and South Korea showing strong growth rates.

“We will be focusing our attention especially on Asia this year, which has already emerged strongly from the economic crisis,” said LANXESS’ Heitmann.