The research and development center of Degussa in Shanghai. The German chemicals giant announced on Saturday that it has begun building of a new plant with investment up to about 250 million euros in the city. [sina.com.cn]

The German-based Evonik Degussa, a global leader in specialty chemicals, announced on Saturday that it has begun building of a new plant with investment up to about 250 million euros in Shanghai.

The plant, located in the Shanghai Chemical Industry Park near Degussa's existing factories, is scheduled to begin production in 2009 after two years of construction.

The new plant would be able to produce about 100,000 metric tons of methyl methacrylates (MMA) annually, along with products such as methacrylic acid and butyl methacrylates, to serve customers in optoelectronics, paints and adhesives industries as well as automobile manufacturers.

Evonik Degussa, formerly known as Degussa, is now a subsidiary of Evonik Industries AG, the newly-named German conglomerate that is engaged in chemicals, energy and real estate sectors, by the name of Chemicals Business Area of Evonik Industries.

The new plant is the second largest single investment ever made by the Chemicals Business Area of Evonik.

"For us, this project symbolizes an important element of our global growth strategy," said Dr. Klaus Engel, member of the Management Board of Evonik Industries responsible for the Chemicals Business Area.

"China plays a central role for our growth strategy in Asia," Engel stressed, pledging to continue its extensive investments in China while labeling the country as "a highly attractive growth market".

China's exports of chemicals reached US$3.68 million in 2006, up from 3.19 million in 2005, and the imports rose to US$5.48 million last year from 5.06 million in 2005.

The chemicals industries have been gradually shifting to Asian countries, especially China and India, in recent years due to the higher labor cost in developed countries.

The German company began specialty chemicals production in China in the 1990s. Currently it has nearly 20 companies in China and operates plants in 10 Chinese cities.

Its products range from precipitated silica, carbon black, rubber silane, amino acids, polyurethane foam additives, and coating polyesters to pigment pastes, colorants, high performance plastics and initiators used in the production of plastics.

Evonik Degussa's 4,000 staff in China generated sales totaling 460 million euros in the fiscal year of 2006, up 60 percent year on year.