Regular readers of China Direct will remember that in September, BASF featured on the site having announced plans to invest $10 billion in a new chemical production site in Guangdong Province. Fast forward to the beginning of 2019, and BASF have announced that a framework agreement has been signed between the German chemical giant and Guangdong Provincial Government.
BASF’s new chemical complex will be built in Zhanjiang city, amid wider initiatives to develop the city as one of Guangdong’s key economic and production hubs.
The agreement between BASF and Guangdong Provincial Government is in the form of an MoU and outlines the planning details for the $10bn project. According to a statement issued after the signing of the MoU, it is the intention of both parties to work to promote the “Idea of advanced technology and smart technologies to maximise resource and energy efficiency to reduce the impact on the environment. [BASF’s new plant] is set to contribute to the industrial transformation of Guangdong.”
Specifically, the site will cover 9 square kilometres and have an annual production capacity of 1 million tonnes of ethylene, which is widely used in plastic manufacturing.
Martin Brudermuller, chairman of the board of executive directors of BASF said, “Chemical output in China is expected to grow 50% of the global total by 2030, and Guangdong stands as an important growing market for innovative chemical products. Our new site will support customers in multiple industries. We aim to help our customers to grow sustainably with our portfolio of products, solutions and services, and at the same time establish new concepts to improve the sustainability of our own operations.”
Guangdong Province is actively courting foreign investors. New rules on foreign direct investment introduced in September 2018 now allow foreign investors to establish solely foreign-owned enterprises in a number of industries: aviation, design, new energy vehicles, ship manufacturing & maintenance, drones, gas-station construction and railway technologies. Subsequently, FDI in Guangdong has grown by 3.1% y/y (2017-2018) to 88.93 billion RMB.
Investment from the UK into Guangdong Province grew at a rate of 93.8% over the first half of 2018.
The Guangdong site will add to BASF’s on-going international Verbund Project. Globally, BASF currently operates six Verbund sites: two in Europe, two in North America, one in Malaysia and one in China. The Nanjing Verbund Project is managed through a 50:50 joint venture with Sinopec.
To read more about BASF’s investment in Guangdong, please follow the link.
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