China approves 35 percent SK stake in $2.7 billion Sinopec ethylene plant

BEIJING Wed Jun 5, 2013 4:39am EDT

BEIJING (Reuters) - China's top economic planner has approved South Korea's SK Group taking a 35 percent stake in a $2.7 billion petrochemical complex that state refiner Sinopec Corp (0386.HK) built in central China, a government statement said on Wednesday.

China's National Development & Reform Commission has approved SK's acquisition of a stake in the complex in Hubei province that has a capacity of 800,000 tonnes per year (tpy) of ethylene.

The plant is now a joint venture between the Chinese state oil major and SK, with a 65-35 split, NDRC said on its website. (www.ndrc.gov.cn)

The two companies signed a preliminary deal in December 2011 to explore joint investment in the project. SK's investment cost for the stake was not given.

Sinopec completed building the complex around the end of 2012 in the central Chinese city of Wuhan.

China imports about half its ethylene needs and is keen to reduce that amount. It plans to add a total of about 7.5 million tpy of ethylene capacity between 2011 and 2015.

Sinopec is the industry leader and produces about two-thirds of China's ethylene, a key building block for petrochemicals from plastics to rubber to fiber, and is widely used in the construction, automobile and textile industries.

(Reporting by Chen Aizhu; Editing by Tom Hogue)

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MikeBarnett wrote:
It is a sound investment for both countries because China’s petrochemical needs will rise as its per capita GDP rises. China’s citizens will want increasing numbers of the “gadgets” with which the US is familiar. 475 million Chinese have not yet completed the shift from rural to urban life, and power lines and wireless towers are making these things more available in the countryside in addition to enticing the people who move to the cities. All of these gadgets need plastic cases, so both companies and countries can prosper.

Jun 05, 2013 4:16pm EDT  --  Report as abuse
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