Ineos Ltd., one of the world’s largest chemical producers, is nearing an $800 million investment in a new plant in China, according to a person familiar with the matter, a sign that multinational manufacturers are still optimistic about China’s economic outlook.
A unit of London-headquartered Ineos plans to build a wholly owned plant in the coastal Chinese city of Ningbo that will produce a type of moldable plastic known as acrylonitrile butadiene styrene, or ABS. The material is commonly used to make Lego bricks and casings for mobile phones and household electrical appliances.
Ineos was founded in 1998 and is majority owned by British billionaire Jim Ratcliffe, one of the U.K.’s richest men. Last year it bought two polystyrene plants in China from French energy giant Total SA, one of them adjacent to the planned new facility, which will be the first plant Ineos builds in China from the ground up.
Ningbo, in China’s eastern Zhejiang province, houses a large petrochemical development hub. Construction of Ineos’s new facility is scheduled to start this year and be completed in 2023, according to the person familiar with Ineos’s plans. Together, the two Ningbo plants could generate annual revenue of $1.5 billion, the person said. Most of the material produced by the factories will be for the domestic Chinese market.
Ineos declined to comment. The privately held conglomerate, which produces a range of oil products and chemicals, has manufacturing facilities in 26 countries and had $60 billion in sales in 2018, according to its website.
China’s economic growth is slowing, and its prolonged trade conflict with the U.S. has pressured some export-oriented manufacturers. But the country’s middle-class is swelling and consumer spending on everything from electronic goods and toys is likely to climb for years to come.
Beijing in recent months has made a renewed push to draw more multinational companies to its shores. It has relaxed ownership restrictions in automobile manufacturing, financial services and other sectors, and has pledged to provide greater market access to multinational firms as it opens up its economy further to foreign investment.
Foreign direct investment into China totaled $124.4 billion in the first 11 months of 2019, the most recent data available from China’s Ministry of Commerce. That was up 2.6% from the same period a year earlier.
Last year, German chemical giant BASF said it would invest $10 billion in a wholly owned petrochemical complex in southern China’s Guangdong province over roughly a decade. Tesla Inc., meanwhile, recently delivered its first made-in-China electric cars from a new $5 billion Shanghai factory and said it has its production target of 1,000 vehicles a week. The company ultimately plans to produce as many as 500,000 vehicles a year in China.
By: Jing Yang
Source: The Wall Street Journal
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