Lanxess Brings Forward Singapore Butyl Rubber Project

Half a year after announcing a postponement in the setting up of its Singapore based butyl rubber facility, synthetic rubber company Lanxess is bringing the timetable forward again. The company will now hold a groundbreaking ceremony in May 2010, and production is expected to start in the first quarter of 2013. The 100,000 tons per annum plant on Jurong Island will require an investment of up to 400 million euros.

The plant, comments Lanxess, will help serve the rising demand for tyres being driven by the trend towards greater mobility, particularly in countries such as China and India. In addition, butyl rubber’s properties make it an important product of choice for the pharmaceutical industry, especially in Asia.

“We are excited to be restarting this project, which will create the world’s most modern butyl rubber plant,” said Lanxess Board of Management chairman Axel C. Heitmann. “This investment – the largest in our five-year history – underlines our commitment to synthetic rubber, our customers and the future growth markets in Asia.” Heitmann added that Lanxess is proud to be building the plant in Singapore, which is the hub of the company’s Southeast Asian activities. The city state has excellent infrastructure, a highly-skilled workforce and very good raw materials supply.
 
Leo Yip, chairman of the Singapore Economic Development Board, added: “We are delighted that Lanxess has brought forward its plan to build Asia’s largest butyl rubber manufacturing plant in Singapore. This decision, together with the relocation of its Butyl Rubber global headquarters, are manifest of Singapore’s value as a home for global companies to manage their global and pan-Asian businesses.”

In June 2009, Lanxess postponed the production start of the plant until 2014 due to the effects of the global economic crisis. This led to a period of de-stocking and high volatility of customer ordering. However, demand has stabilised in the last six months and the global butyl rubber market is expected to grow again annually by an average of more than three per cent in the coming years. Lanxess’ two existing butyl rubber production facilities in Zwijndrecht, Belgium, and Sarnia, Canada, are currently running at high capacity rates.

Lanxess anticipates a return of global tyre sales to pre-crisis levels in 2011 as the tyre replacement market and new vehicle production levels gradually recover. In order to meet this growing demand, Lanxess’ customer base – the world’s leading tyre manufacturers – are planning capacity expansions in the BRIC markets.

The company will lease about 200,000 square metres of land from the JTC Corporation, an authorised agent of the Singapore Ministry for Trade and Industry, to build the plant. The neighbouring petrochemical refinery belonging to Shell will supply the feedstock for the key raw material isobutene to the Lanxess rubber plant as part of a long-term agreement. In addition, the company will create about 200 highly-skilled jobs for the new facility and plans to fill the majority of positions locally. At peak construction times, around 1,500 workers will be employed at the construction site.

A complete evaluation of the existing process to manufacture butyl was carried out for the new Singapore facility and Lanxess says a radical redesign will be implemented. It adds that the process, which draws on the company’s history of rubber expertise, will be “best in class”. As a result, the butyl plant will be more energy and resource efficient as well as environmentally friendly.

Additionally, during 2010 Lanxess will relocate the global headquarters of its Butyl Rubber business unit to Singapore from Fribourg, Switzerland, in order to better serve the rising demand in Asia. The headquarters, including all global management functions such as marketing, controlling and supply chain, will initially house some 35 employees. More than half of the company’s butyl rubber sales are currently generated in the Asia region, with especially China, India and South Korea showing strong growth rates. “We will be focusing our attention especially on Asia this year, which has already emerged strongly from the economic crisis,” said Heitmann.

Butyl rubber is a synthetic rubber with high air impermeability based on the raw materials isobutene and isoprene. The largest application is in the manufacturing of tyre inner liners and tire inner tubes. The tyre industry uses halobutyl as an inner liner for car, truck, bus and aviation tyres. Regular butyl is used in inner tubes for cars, trucks and bicycles or sports balls. Special applications include protective clothing and pharmaceutical closures. The use of butyl in chewing gum production represents one particularly interesting niche market.