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SCMP Reporter

BRITAIN'S largest chemical maker has announced plans to invest US$440 million in two plants in Shanghai, raising substantially its stake on the mainland.

   ICI chief executive Charles Miller-Smith said one was a $400 million world-scale heavy chemical joint venture, the other a $40 million paints plant.

  The investments signal a strategic move by ICI to tap one of the world's fastest-growing markets and blends in with China's intention to develop the chemical sector as a pillar industry.

  'These investments show that ICI is making a major commitment to Shanghai and to China,' Mr Miller-Smith said.

  Because of these investments, ICI was projecting double-digit sales growth in China, Hong Kong and Taiwan in the next 10 years.

  Mr Miller-Smith forecast that by the end of the decade, annual China sales would triple to about $790 million.

  Yesterday's proposed investments will bring ICI's manufacturing ventures on the mainland to four.

  The existing ventures are a $28 million paints plant in Guangzhou and a $9 million chemical blending venture in Shanghai.

  A letter of intent for the heavy chemical plant was signed yesterday with Nippon Polyurethane Industry and Shanghai Tian Yuan Chemical Works.

  The two foreign partners will hold an 80 per cent stake, with Shanghai Tian Yuan taking the remaining 20 per cent.

  When it begins production early in the next decade, the venture will be one of the four world-scale ICI plants to make MDI, a key component of polyurethanes used for insulation in domestic appliances, footwear, construction and transport.

  ICI Polyurethanes managing director Richard Stillwell said: 'We're talking about a production capacity of 100,000 tonnes, which makes it one of the largest of its kind.'   The group had one such plant each in Japan, the United States and the Netherlands, he said.

  The Netherlands MDI plant could produce 160,000 tonnes annually, which the Shanghai plant would eventually match.

  Because of China's rapid economic growth, demand for MDI polyurethanes was very strong.

  'So the Shanghai plant will cater mostly to domestic demand, and if there is excess capacity, we will sell to our partners,' Mr Stillwell said.

  The new paints plant would come on-stream in 1997 and initially produce 35 million litres of decorative paint annually, rising to 55 million litres.

  Mr Miller-Smith said: 'We aim to become a leading paint maker in China by the end of the decade.'   ICI also runs a joint venture with Swire Pacific in Guangzhou, which produces 15 million litres of paint annually.

  'Looking forward, in 10 years, we see around a third of our business in Asia,' Mr Miller-Smith said.

  A total of 25 per cent of ICI's business was generated in Asia, he said.

  ICI China chairman Des O'Shea said sales in China had been rising 30 per cent year-on-year despite the credit squeeze.

  'Although the credit squeeze will be on-going for the next six to nine months, we are still optimistic that we can continue to achieve the same sort of rates of growth we have been achieving,' he said.



ICI to set up two new plants