The plant, the company’s largest, will be constructed in the Tembusu sector of Jurong Island.
“LANXESS is already one of the market leaders in the butyl rubber business, which is of strategic importance to us,” said Ron Commander, head of the company’s butyl rubber business unit.
“This new production plant in Singapore is in response to the growing demand for this product. The booming economic region of Asia is playing a particularly important role in this. Our sales to customers in this region have risen by around 45% since 2004.”
Singapore was chosen following a detailed analysis of a wide range of location factors.
“The overriding argument in Singapore’s favor is the excellent availability of raw materials for butyl rubber production,” said Mr Commander.
The company has secured supplies of the key raw material through a long-term contract with Shell Eastern Petroleum (Pte) Ltd before construction even started.
From 2010, Shell will supply Raffinate 1 – a product created through butadiene extraction – by pipeline from its butadiene extraction unit on neighbouring Bukom Island, which is part of the Shell Eastern Petrochemicals Complex (SEPC).
Pieter Eijsberg, SEPC’s general manager, said: “We are delighted that LANXESS has chosen Shell as a significant partner in its expansion plans, and this agreement clearly underlines the industry’s confidence in our C4 business.”
LANXESS will extract isobutene, necessary for rubber production, and will also market the byproduct, Raffinate 2, externally. LANXESS also aims to conclude long-term supply agreements with Asian producers for isoprene, the second raw material for butyl rubber production, of which much lower volumes are needed.
JTC Corporation, Jurong Island’s landlord, has allocated LANXESS a 20,000 sq m site on Jurong Island. Construction is scheduled to start next year. When completed, the plant is expected to employ more than 200 staff.
LANXESS said it has significantly expanded its two existing production sites in Zwijndrecht, Belgium and Sarnia, Canada in the last two years.
Once the latest expansion phase in Sarnia is completed, the company will have an annual capacity totaling 280,000 metric tons of butyl rubber from 2009 onwards.
LANXESS expects sustainable annual market growth for butyl rubber of around 3% per year over the next 15 years. Demand from China, Taiwan and Hong Kong is expected to grow by 6% per year while the Indian market is seen growing by more than 8%.
As well as regular butyl rubber itself, halogenation products from this rubber, particularly bromo¬butyl rubber, are increasingly important and already dominate the market. 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 ply tire production in Asia.
Butyl rubber is also essential for a large number of special applications, including bladders for sports balls, pharmaceutical closures and chewing gum production.
LANXESS’s butyl rubber business unit is one of the leading producers of butyl rubber, with annual sales of over 500 million euro.
LANXESS is a leading specialty chemical company, with sales of 6.94 billion euro in 2006 and over 14,500 employees in 21 countries around the world.