BASF to Build new “Verbund” Site in China
New Site in the South Chinese Province of Guangdong Would Ultimately be BASF's Third Largest Site Globally
BASF is planning to build a new integrated production hub – a concept it calls “Verbund” – in the South Chinese province of Guangdong. This would ultimately be its third largest site globally, behind Ludwigshafen, Germany, and Antwerp, Belgium. Potentially, 2,000 employees as well as 1,000 external contractors could be active there.
New CEO Martin Brudermüller signed a non-binding Memorandum of Understanding (MoU) for the mammoth project on Jul. 9 in Berlin in the presence of the executive vice governor of Guangdong, Lin Shaochun, Chinese Premier Li Keqiang and German chancellor Angela Merkel.
The complex, which is expected to cost as much as $10 billion by completion in 2030 – the German chemical giant’s largest-ever investment – would be wholly owned by BASF. The first production facilities could be ready to start up by 2026. Output would supply South China.
In the initial phase, the hub would encompass petrochemical plants downstream of a steam cracker with a projected capacity of 1 million t/y of ethylene. In subsequent stages, plants for more downstream products and solutions, including automotive or consumer goods, are planned to be added. BASF said it intends to implement a comprehensive smart manufacturing concept based on “cutting-edge technologies.”
For some time, the world’s largest chemical producer, apart from the soon-to-be split DowDuPont, has been poised to make its first capital investment in China without a mandatory local joint venture partner. In June, the government of the People’s Republic finally made the move possible as it took steps toward easing the rules for foreign investors.
With a share of around 40%, China is both the world’s largest chemical market and the fastest growing. Guangdong province, which counts more than 110 million residents, is its most populous.
Home to many key industries, the province’s gross domestic product is growing at 7% annually. It has already passed Spain and will soon have reached that of South Korea, figures show.
BASF began investing in China in the early 1990s and by the middle of the decade was already a partner in five joint ventures. Its first “Verbund” site in the country was established in 2000 at Nanjing as part of a 50:50 jv with Chinese state-run petrochemicals group Sinopec.
The German group currently operates six such highly integrated sites worldwide. Its two biggest, in Germany and Belgium, are in Europe. Asian sites are at Nanjing and Kuantan, Malaysia. The sites on the US Gulf Coast are at Geismar, Louisiana, and Freeport, Texas.