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The leading specialty chemicals company has committed up to €400 million to set up its new production site for synthetic rubber. (Photo: LANXESS)
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The world has not seen a new facility for butyl rubber since the beginning of the new millennium, which makes leading specialty chemicals group Lanxess AG's latest investment on a new rubber production facility in Singapore all the more noteworthy.
Lanxess, a global market leader in the synthetic rubber business, has set aside S$823 million (€400 million) to set up its chemical production site for synthetic rubber in Singapore’s petrochemical hub, Jurong Island.
With this investment, the company has achieved several milestones. The facility is Lanxess' biggest ever single investment to date, and when completed, the 200,000-sq m site will be the largest facility of its type in Asia.
Rising Demand
It is a timely investment too, as market analyses have forecasted that the global demand for butyl rubber will climb steadily in the future. This is aided by market growth in China and India, whose annual expansion rates hit six and eight per cent respectively. "By setting up this new facility in Singapore, Lanxess is responding to the significant growth in global demand for butyl rubber," explains Dr. Axel C. Heitmann, Chairman of the Board of Management, Lanxess AG.
Butyl rubber, and increasingly, halogenated rubber products are becoming more important, particularly in the inner-most, air- and humidity-impermeable lining of tyres. This allows tyre pressure to be kept at a constant over longer periods of time, which makes vehicles safer, consume less fuel, produce fewer harmful emissions, and thus create benefits all around.
Having expanded its rubber production facilities in Belgium and Canada, the company had its sights set on Asia, particularly Malaysia, Thailand and Singapore, to complete its long-term global expansion plans. After considering all factors, the company selected Singapore due to its excellent infrastructure, large sea port, and excellent raw materials supply. It also took into account the country's ready pool of highly qualified workforce and competent logistics arrangements.
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"We have long appreciated the strengths of this unique, dynamic city, and we have long recognised that Singapore can, and should, play a critical role in the growth of Lanxess."
- Dr. Axel C. Heitmann, Chairman of the Board of Management, Lanxess AG
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"We have long appreciated the strengths of this unique, dynamic city, and we have long recognised that Singapore can, and should, play a significant role in the growth of Lanxess," says Dr. Heitmann. "With this new facility, we now have a global footprint for innovative butyl production with sites in Europe, North America and Asia. It brings great benefits to our business, customers and our host cities too."
The company is looking to hire 150 engineers and 1,500 workers to start constructing the facility in the first quarter of 2009, in addition to the 200 new jobs that this investment is expected to create. Prior to this announcement, Lanxess had already established its presence on Singapore's shores, with a sales centre that comprises more than 70 employees.
Diversified Capabilities
With the introduction of Lanxess' new rubber production site, Singapore's chemical industry has added another feather in its cap. In the midst of heavy competition from emerging petrochemical hubs in China, India and the Middle East, the city-state is keen on distinguishing itself by introducing new chemistry chains downstream, resulting in the production of more specialty and higher value chemicals and polymers. The Lanxess project is the perfect illustration of this, according to Aw Kah Peng, Assistant Managing Director, Industry Development, Singapore Economic Development Board (EDB).
The significance of this investment, to both Lanxess and Singapore, is summed up succinctly by Dr. Heitmann when he says, "This facility is a milestone for Lanxess and the entire chemical industry. And it marks another milestone in the remarkable economic progress of Singapore."
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