LANXESS to Make Record Investment in Singapore

27 Feb 2008 • by Natalie Aster

LEVERKUSEN -- Specialty chemicals group LANXESS AG is set to make the biggest single investment in its history in Singapore. A new chemical production site for synthetic rubber is to be built at the chemical park on Jurong Island. LANXESS has earmarked a record amount of EUR 400 million for this investment. From 2011, the site in Singapore will produce up to 100,000 tons of butyl rubber annually, making the LANXESS plant the largest facility of its type in Asia. Construction is due to begin in the first quarter of 2009 and will be completed by the end of 2010. Some 200 new jobs will initially be created.

The new chemical facility will produce butyl and halobutyl, synthetic rubbers that are used in the production of tires. "By setting up this new location in Singapore, LANXESS is responding to the significant growth in global demand for butyl rubber," said Chairman of the LANXESS Board of Management Axel C. Heitmann at an international press conference in Singapore.

"The boom in Asia as an economic region is playing a particularly important role in this," added Heitmann. Market analyses confirm that the global market for butyl rubber will rise steadily in the coming years. Growth is most pronounced in China, where it corresponds to six percent annually, and in India, where it is more than eight percent. "With the new capacities, we will consolidate the good market position we already occupy," said Heitmann.

LANXESS began evaluating potential locations in Malaysia, Thailand and Singapore in June 2007. The Asian city state won over the competition from Malaysia and Thailand due to its excellent infrastructure, large sea port, and very good raw materials supply. Additional arguments in favor of Singapore were the highly qualified specialists and logistics arrangements.

"Our new site in Singapore is the world's first new facility for butyl rubber to be built since the beginning of the new millennium," said Heitmann. The JTC Corporation, an authorized agent of the Singapore Ministry for Trade and Industry, has offered LANXESS attractive terms for the site on Jurong Island that covers approximately 20,000 square meters. Construction will start at the beginning of 2009, with 150 engineers and around 1,500 workmen to be employed on the building site. The facility is scheduled to start production in 2011. Some 10 to 15 percent of the construction expenditures are expected to go into installing pioneering environmental technologies.

Already today, LANXESS is a global market leader in the synthetic rubber business. In the past two years, LANXESS significantly expanded its production rubber facilities in Zwijndrecht, Belgium, and Sarnia, Canada. The Singapore site will complete the global production network. In combination with the completion of the latest expansion phase in Sarnia, the company will have an annual capacity totaling 280,000 metric tons of butyl rubber in 2010.

Up until now, LANXESS's representation in Singapore has comprised a sales center with more than 70 staff. The record investment at the new production site in the Jurong Island Chemical Park will create more than 200 new highly-skilled jobs. In addition, future sales activities for this important region for LANXESS will be directed from Singapore. The global headquarters of the Butyl Rubber business unit is in Switzerland.

In addition to regular butyl rubber, halogenated products, particularly bromo-butyl rubber, are becoming increasingly important. Tire inner liners - the innermost, air- and humidity-impermeable layer of a tubeless tire - are the major area of application for halobutyl rubber. They keep tire pressure constant over a long period. This makes vehicles safer and ensures they consume less fuel and therefore produce fewer harmful emissions. Market growth is being accelerated in particular by the expansion of radial tire production in Asia.

The Butyl Rubber business unit is worldwide one of the leading producers of synthetic rubber, with annual sales of over EUR 500 million, and is part of the Performance Polymers segment. The segment recorded sales of EUR 1,996 million in the first nine months of 2007.

LANXESS is a leading specialty chemical company, with sales of EUR 6.94 billion in 2006 and approximately 14,500 employees in 21 countries around the world. The company has operations at 47 sites worldwide. LANXESS's core business comprises the development, manufacture and sale of specialty chemicals, plastics, rubber and intermediates.

This news release contains forward-looking statements based on current assumptions and forecasts made by LANXESS AG management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.