Bayer: Investments to strengthen growth in China

Ceremony attended by Germany's Chancellor Schröder and China's Premier Wen Jiabao

10-May-2004

In the presence of Gerhard Schröder, the German Chancellor, and Wen Jiabao, the Chinese Premier, Werner Wenning, the Chairman of the Board of Management of Bayer AG, and Prof. Gottfried Plumpe, a member of the Board of Management of Bayer MaterialScience AG, signed an agreement with Ruan Yanhua, President of the Shanghai Chemical Industry Park Corporation, to build a world-scale production plant for the coating raw material HDI (hexamethylene diisocyanate). The ceremony was held during the third German-Chinese high-technology dialogue forum on May 4, 2004, in Berlin.

The HDI project involves a total capacity of up to 50,000 t/y and an investment of some USD 100 million. Construction of the new facility is scheduled to begin in fall 2004. HDI is a precursor for aliphatic polyisocyanates, which serve as raw materials for high-grade polyurethane coating systems. Such systems are used predominantly for automotive, industrial and plastics coatings. Bayer is the market and technology leader in this field.

"China is already one of our most important markets," said Management Board Chairman Wenning during the signing of the agreement. "China's importance for the chemical and pharmaceutical industry will increase further in the coming years. Bayer wants to play a leading role in the economic development of the People's Republic. With our investments in Caojing, we are creating ideal conditions for strengthening our growth in this key market."

Over the next few years, total investments of some USD 3.1 billion are scheduled for the integrated production site at Caojing near Shanghai. Of this, Bayer will spend some USD 1.8 billion on new facilities for polymer production - construction work has already begun in some cases. Other projects worth a total of USD 1.3 billion are also planned, but these will be tackled later.

With the building of large capacities for polyisocyanates, Caojing will become the main production site for Bayer MaterialScience's coating raw materials in the Asia-Pacific Region. Initial production capacity for the precursor HDI will reach 30,000 t/y by 2006. Depending on the way the market develops in the region, capacity could be extended by a further 20,000 t/y as part of a second construction phase. Since April 2003, coating raw materials in the Desmodur® N range have been produced in a neighboring plant that has an annual capacity of 11,500 t. At the end of 2004, a production facility for Desmodur® L with a capacity of 11,000 t/y is also due to go on stream.

Also at the Caojing site, construction has started on a new world-scale production plant for Makrolon® polycarbonate. The intention is that the plant will go on stream in 2006, and will gradually be expanded to reach a total capacity of 200,000 t/y - in line with market developments. A further focus of investment is the construction of world-scale production facilities for the two polyurethane raw materials, MDI and TDI, which are used predominantly in the manufacture of polyurethane foams. The plants for MDI and TDI are scheduled to begin production by 2008 and 2009 respectively.

With sales of around EUR 1.1 billion in 2003, the Greater China country group is Bayer's second-largest single market in Asia after Japan. The company employs more than 2,700 people in Greater China and is also represented there by a total of 24 firms. Eleven manufacturing companies from all Bayer's areas of business are now producing in the region, with the result that an increasing proportion of sales is being covered by local production.

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