BASF Moves Forward With Investment in Asia-Pacific

12 February 2001 00:00  [Source: ICB Americas]

By Mike McPadden

In an effort to further strengthen its holdings in Asia-Pacific, BASF AG is proceeding with three sizable business undertakings by creating new facilities and fresh alliances with local companies.

In the largest of these new ventures, last week BASF YPC Company Ltd. awarded a contract to The Shaw Group Inc. for the engineering, procurement, and physical assembly of a 600,000 metric ton-per-year steam cracker and its related facilities in Nanjing, China. Shaw will be handling the deal through its subsidiary, Stone & Webster (S&W), with construction being subcontracted to an independent Chinese company. Shaw purchased S&W in July 2000, and some of the plant equipment and other materials that the company obtained in that transaction will be used for this project.

The steam cracker, or ethylene plant, will be the centerpiece of a $2.6-billion, 220-hectare integrated petrochemical site jointly owned by BASF and China Petroleum & Chemical Corporation (Sinopec Corp.).

BASF and Sinopec received initial approval from the Chinese government to commence work on June 30, 2000. This is the first joint venture employing a world-scale steam cracker that has been approved by Chinese state authorities. Construction on the site is scheduled for 2002, with operations expected to go on stream by 2004 or 2005.

BASF is still negotiating another major joint venture project with the Chinese government, one that would produce poly-urethane precursors at Caojing, Shanghai.

In Rayong, Thailand, BASF has launched a new plant that will manufacture superabsorbents, with an annual capacity of 20,000 metric tons. The market for superabsorbents is one of the fastest growing in the entire chemical industry, according to BASF, with Asia exhibiting perhaps the world's strongest potential. The Rayong plant will supply markets in Thailand and other countries in Asia.

Helmut Nickels, who heads up BASF's global superabsorbents business, says that the Rayong project will "lead to an expansion of our Asian capacities in due course. In doing so, we will greatly benefit from our acrylic acid complex at our Verbund site in Kuantan, Malaysia, which started production in mid-2000."

In Bombay, BASF India Ltd. will be merging with the agrochemicals corporation Cyanamid Agro Ltd. The share exchange ratio for the merger is reported to have been fixed at 2 cents a share of BASF India for every five equity shares of Cyanamid. Until last month, over 68 percent of Cyanamid Agro was owned by American Home Products Corp (AHP), when BASF bought AHP's holding in the firm. Last year, BASF purchased the agrochemical business of American Home Products worldwide for $3.8 billion. Following the merger, BASF's holdings in India will rise from just over 50 percent to almost 52.7 percent.

By the end of 2000, BASF had invested roughly $2.1 billion in Asia-Pacific and owned or held equity in over 60 Asia-Pacific companies, which employed about 11,000 workers in 17 different nations. These businesses produce and sell products for the health and nutrition industries, colorants and finishing products, chemicals, plastics, and fibers for numerous applications in a vast array of industries.

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