BEIJING // The Abu Dhabi-based plastics producer Borouge plans to build a second factory in China, a little more than a month after inaugurating its first plant in the country. The new operation will be based in Guangdong province in the south of China to take advantage of the many car and appliance factories based nearby.
Late last month, Borouge, the joint venture between Abu Dhabi National Oil Company and the Vienna-based plastics company Borealis, inaugurated a plant in Shanghai, which is also is handy to car and appliance manufacturers. The China operations add substances to polypropylene raw material supplied by Borouge in Abu Dhabi to create compounded plastic pellets used to make car components such as dashboards, door fittings and bumpers, as well as components for white goods.
Kevin Liu, a Shanghai-based vice president of Borouge's marketing arm, said the company was keen to capitalise on the "very rapid growth" in the car sector in China, which last year overtook the US to become the world's biggest car manufacturer. "There is a good outlook for the next 10 years for the automotive market and so far we already have the compounding plant in Shanghai, which can cover eastern China and northern China, but there's another part [of the country] with big market potential - southern China," he said.
Demand for plastics in Guangdong is strong as Toyota, Honda and Nissan each have factories there, Mr Liu said, and it will grow further as Volkswagen is setting up a plant factory there. "Guangdong is also a global appliance manufacturing site. It produces a huge number of washing machines, refrigerators and other appliances. That's the target." Borouge signed an agreement yesterday to open the plant with the municipal government of Nansha, a district of the provincial capital Guangzhou. The new plant, due for completion in mid-2012, will be capable of making up to 105,000 tonnes of compounded polypropylene resins annually.
Borouge also has distribution centres at Shanghai and Guangzhou. The value of the new plant has not been announced, although the factory in Shanghai cost US$70 million (Dh257.1m). John Zeng, a senior market analyst at Asian Automotive Forecast Service, said top local car makers, such as BYD, also have plants in Guangdong and could be a market for the plastics. While Borouge is investing in China, where many of its customers are based, it is also developing its facilities at home. The company is establishing an Innovation Centre in Abu Dhabi which due to be completed by the end of next year and is also expanding production facilities in Ruwais, where it makes plastics from natural gas. business@thenational.ae