BASF kicks off China megaproject
German chemical giant BASF has begun construction of its $10bn mega project in southern China, which will be the country’s first wholly foreign-owned chemical complex.
Announced in June 2018, BASF’s integrated petrochemicals project in the Chinese city of Zhanjiang, broke ground in November 2019. The $10bn project is the joint second largest announced greenfield project in the chemicals sector and the largest announced by BASF to date, according to greenfield investment monitor fDi Markets.
As China’s first wholly foreign-owned chemical complex, the site will produce engineering plastics and thermoplastic polyurethane to satisfy the growing demand from various growth industries throughout Asia, according to the company’s statement. BASF anticipated its largest ever project will “form a solid foundation for a world-class industrial cluster in Zhanjiang and establish stronger business connections between South China and other Asian countries”, said Stephan Kothrade, president and chairman Greater China at BASF.
The first plant is expected to be operational by 2022 while the whole Verbund site is planned to be completed by 2030. This would ultimately be the third largest BASF site worldwide, following Ludwigshafen in Germany, and Antwerp in Belgium.
BASF’s greenfield project reflects the company’s confidence in China, which has been the world’s largest chemicals market by revenue since 2011 and has contributed half of the growth in the global chemicals market in the past two decades, according to a McKinsey report. China has attracted 1468 greenfield projects in the chemicals sector since 2003, comprising 18.7% of the total global greenfield investment in this sector, and more than double that of the US, according to fDi Markets.
China saw a fourfold rise in announced greenfield foreign investment in the chemicals sector from 2015 to 2018. It has been the biggest recipient country of BASF’s greenfield investments, accounting for 22.7% of all announced projects and 61.2% of announced capital expenditure, according to fDi Markets. The database tracked 84 greenfield FDI projects announced by BASF in China since 2003, with an estimated $27.8bn of capital expenditure.
BASF’s greenfield investment into Chinese chemicals remained strong in the first 10 months of 2019, with four greenfield projects and $256m invested.
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