SABIC expands China development centre, local manufacturing

SABIC expands China development centre, local manufacturing
Author: Justin Smith
Source: BI-ME
Published: 26 April 2008

INTERNATIONAL. China’s thriving economy is driving demand across multiple industries for fast access to high-performance plastics and value-added development services. At Chinaplas 2008 this week, SABIC Innovative Plastics announced a multi-pronged strategy to meet these customer needs through expansion of local expertise and product fulfillment. The company is adding significant production capability to its plant in Pudong, Shanghai. A new facility housing four extrusion lines that will begin operations this month.

SABIC Innovative Plastics - the division of Saudi Basic Industries Corp - will also expand its China Technology Center, located here, with the creation of a new Centre of Excellence focused on notebook computers. The company’s continued investment in application development and production resources will provide customers in Greater China and Asia with faster procurement and outstanding technical support.

“Asia is a major strategic focus for SABIC Innovative Plastics, where we are demonstrating our commitment by locating new production facilities and services close to customers to work with them as long-term partners.” said Alan Leung, Pacific president for SABIC Innovative Plastics.

“Our goals are to help automotive, electrical and electronics, and other leading OEMs and moulders reduce time to market for their products and achieve a major competitive advantage by leveraging end-to-end development expertise. Our mission is to continue to leverage this expertise as engineering plastics pioneers to drive our customer-focused initiatives forward, evidenced by the recent opening of the new production lines in Chung-ju, Korea, to make LNP Verton composites readily available to Asian customers.”

The new extrusion facility will produce a range of resins for the automotive and electrical and electronics sectors. It is the first SABIC Innovative Plastics site created using lean manufacturing design, an approach is that completely different from traditional models. Lean manufacturing allows for the production of small lot orders, the flexibility to change production very quickly, and enables a continuous process for manufacturing and delivery to the customer, reducing cycle time for producing materials.

More than 80% of the world’s notebook PCs are produced in China. To support application innovation, the SABIC Innovative Plastics Centre of Excellence will offer comprehensive design, material specification, testing, and processing expertise. Because of its location in the China Technology Centre, the new Centre of Excellence will be able to draw upon resources such as polymer formulation and color and effect development. Customers can work with SABIC Innovative Plastics’ experts to create and validate new applications, reducing innovation development cycle times, and boosting their competitive differentiation.

SABIC Innovative Plastics will establish a new, world-class R&D and Customer Technology Centre (CTC) in Shanghai by the end of 2010. The new facility will also serve as the Asia Pacific headquarters for SABIC Innovative Plastics. It will be the focal point for the company’s rapid growth and expansion in Asia, and will house global R&D activities supporting the needs of global customers. This new facility investment clearly reaffirms SABIC Innovative Plastics’ commitment to customers in the region with expanded capabilities beyond those offered at the current CTC. It will also be the center of SABIC Innovative Plastics’ future application development activities here.

“Our continued investments in China will accelerate SABIC Innovative Plastics’ long tradition of supporting our Chinese and global customers in the region with the innovative product solutions and outstanding technical support they need to succeed,” Leung added. “Their success is our success and the ultimate measure of our achievement.”

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Sabic may spend $5bn in Iraq as competition for gas heats up
Published: Sunday, 27 April, 2008, 01:35 AM Doha Time

DUBAI: Saudi Basic Industries Corp, the world’s largest petrochemical firm by market value, may invest $5bn in war-torn Iraq as competition for energy at home forces it to search for cheap gas in riskier Mideast locations.

The Riyadh-based company, known as Sabic, is in talks with Iraq’s government “to build a new factory to produce polyethylene and polyvinyl chloride,” Faris Taha Abdul Hameed, Iraq’s chemical industry director, told Zawya Dow Jones on the sidelines of a conference in Dubai this week.

Sabic joins companies like Royal Dutch Shell, Dow Chemical Co and Total as the latest to flirt with a major investment in Iraq amid ongoing political uncertainty and violence in the country.

For their part Sabic officials are quick to pour cold water on the Iraq project talks.

“This has been twisted politically,” chief financial officer Mutlaq al-Morished, told Zawya Dow Jones in a phone interview on Thursday. Al-Morished declined to comment further on the status of talks.

But war-torn Iraq is not the only high-risk market that Sabic is turning to in search for ethane-rich gas, the vital ingredient for making petrochemicals that are eventually processed into plastics.

The company plans to invest in Algeria, holder of the world’s sixth-largest gas reserves. Last year it lost out to French oil-giant Total in a bid for a $3bn petrochemical complex at Arzew.

Rising gas consumption in Saudi Arabia is putting Sabic increasingly under pressure to invest outside the kingdom, which is home to the world’s fourth-largest natural gas stocks.

But as it ventures further afield in search of gas Sabic risks losing the home field advantage that has propelled it to the top of the class of international petrochemical makers.

Between 2005 and 2030, Saudi gas consumption is forecast to rise at least threefold to 14.5bn cu ft a day, partly driven by rising petrochemical requirements.

Further pressure on gas supplies comes from other industrial projects such as aluminum smelters and annual population growth rates above 2.2%, which makes it harder for Sabic to secure resources for expansion.

“Gas demand in the Gulf is increasing for petrochemical and industrial uses, especially as the regional economy booms,” said Roger Green, a principle at Nexant Chem Systems in London. “Industrial growth puts pressure on energy supplies which increases gas demand.”

Iraq plans to lure companies like Sabic with access to each vast and cheap natural resources in return for investment as it struggles to rebuild its shattered economy.

Abdul Hameed said the Sabic plant, which may cost up to $5bn, could have capacity to produce 1mn tons a year of petrochemicals.

“The factory will take up to five years to build and Sabic is still taking its decision,” he added.

Last year, Iraq’s industry and minerals minister Fawzi Al Hariri said the government was seeking investors for a possible $1bn upgrade of a petrochemical plant in Basra and the possible construction of a new $2bn facility in the country’s northern or central regions.

Talks were held with Shell and Dow Chemical, Al Hariri said at the time.

Other plans to rebuild Iraq’s dilapidated hydrocarbons sector involve rehabilitation of an existing phosphate plant by a consortium of companies from the UAE, India, Singapore and Syria in the west of the country, Abdul Hameed said.

“As a major petrochemical company, Sabic would look at any opportunity in the Middle East and elsewhere. Every company is looking for attractive feedstock and Iraq has significant hydrocarbon reserves. Companies may be positioning themselves for quieter times ahead in Iraq,” said Nexant’s Green. – Zawya Dow Jones