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| March 19, 2004 |
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| PTA Project in Daxie Island, China |
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| Mitsubishi Chemical Corporation |
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Mitsubishi Chemical Corporation (MCC) (Head office: Minato-ku, Tokyo; President: Ryuichi Tomizawa), ITOCHU Corporation (ITOCHU) (Head office: Osaka-city, Osaka; President: Uichiro Niwa), and Mitsubishi Corporation (MC) (Head office: Chiyoda-ku, Tokyo; President: Mikio Sasaki) finalized a plan for purified terephthalic acid (PTA) project in China and submitted the Detailed Feasibility Study to the Chinese government on March 10, 2004. The final business proposal is going to be approved by the Chinese government in June or July this year.
The outline of the investment plan is as follows (see Attachment 1 for company profile):
| (1) |
MCC, ITOCHU, and MC establish a new investment company, Ningbo PTA Investment Co., Ltd. in Japan. (February 2004) |
| (2) |
The new investment company and China International Trust & Investment Corporation (CITIC) Group establish a new joint venture company, Ningbo Mitsubishi Chemical Corporation in mainland China. (June 2004) |
| (3) |
The new joint venture company completes the plant (July 2006) and commences the commercial operation (September 2006). |
MCC has developed the PTA business in four locations such as the Matsuyama Plant of MCC (Japan), Sam Nam Petrochemical Co., Ltd. (Korea), PT. Mitsubishi Chemical Indonesia (Indonesia), and MCC PTA India Corporation Private Limited (India), based on the policy of PTA business; "To locate, produce, and distribute in a growing market results in making appropriate profits. Moreover, it enables us to expand the business and increase its competitiveness."
In China, demands of polyester fiber are rapidly increasing along with the country's fast economic growth. The demand of PTA as raw material for polyester fiber reached about 8.3 million tonne/year in China in 2003. In this growing market, 54% of the total demand relies on imports, and the demand has been expected to increase by more than 10% in the years ahead. In this situation, MCC carried out feasibility studies on PTA business in China, in order to respond to these active demands. MCC reached a conclusion, which is quite possible to offer competitive products to customers in terms of both quality and price also in China, with a world-leading MCC proprietary production technology. As a result, MCC decided to set up PTA producing company in China. So as to realize this business initiative, it is indispensable for MCC to reinforce functions such as sales, distribution, and raw material procurement. Therefore, MCC requested ITOCHU and MC to participate in this PTA project, and concluded an agreement with them.
ITOCHU handles the biggest volume of PTA among Japanese trading companies, and positions "polyester chain" as a focused strategic business area in chemicals. Especially, their handling volume is more than 10% of the total PTA imports to China and they have a strong sales network in China. This network will effectively support the PTA sales in the joint venture company. In addition, ITOCHU contributes to the development of this PTA project by providing customers' information, financing and business know-how in China, using their extensive knowledge and experience acquired from successful fiber business and China business.
Process to date and schedule for application and approval are the following:
| (1) |
The first business proposal [Pre Feasibility Study] was submitted to the State Development Planning Commission of the People's Republic of China (now: the National Development and Reform Commission). (February 2001) |
| (2) |
The first business proposal was ratified. (June 2003) |
| (3) |
The detailed feasibility studies were carried out, and investment conditions and others were examined. (-February 2004) |
| (4) |
The outline of environmental assessment was approved by the State Environmental Protection Administration. (November 2003) |
| (5) |
The final Environmental Report was submitted to the State Environmental Protection Administration. (February 2004) |
| (6) |
The final business proposal [Detailed Feasibility Study] was submitted to the National Development and Reform Commission. (March 10, 2004) |
| (7) |
The final Environmental Report will be ratified. (End of March, 2004) |
| (8) |
The joint venture company in China will be established. (June or July 2004) |
The plant of this project is located in a large-scale industrial area, the Ningbo Daxie Development Zone where the CITIC Group has developed. The Ningbo Daxie Development Zone has many advantages for the PTA business such as (i) locating in the East China where shows the remarkable economic growth in China, and also in Zhejiang Province where is the center of fiber industry and close to customers, (ii) having a good natural harbor with enough depth for receiving raw materials.
MCC, ITOCHU, and MC will develop the joint venture company to be an excellent PTA producer with a strong presence in the Chinese market, under the close collaboration with the Chinese government and partner.
| For further information, please contact |
| Public Relations and Investor Relations Dept., |
| Mitsubishi Chemical Corporation |
| Tel: [+81]-(0)3-6414-3730 |
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Reference
| Attachment 1 |
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Company profile |
| Attachment 2 |
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Investment structure for the new investment company in Japan and the joint venture company in China |
| Attachment 3 |
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MCC's PTA business locations and production capacities |
| Attachment 4 |
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Map of Daxie Island |
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<Company Profile>
1.New investment company in Japan
| (1) Establishment: |
February 2004 |
| (2) Company name: |
Ningbo PTA Investment Co., Ltd. |
| (3) Location of head office: |
Minato-ku, Tokyo |
| (4) Capital (plan): |
97.2 million US dollar (About 10.3 billion yen) |
| (5) Investment ratio (plan): |
| Mitsubishi Chemical Corporation |
61% |
| ITOCHU Corporation |
35% |
| Mitsubishi Corporation |
4% |
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| (6) President: |
Masaoki Funada
(Senior Managing Director, Mitsubishi Chemical Corporation) |
2.Joint venture company in China (plan)
| (1) Establishment: |
June 2004 |
| (2) Company name: |
Ningbo Mitsubishi Chemical Corporation |
| (3) Location of head office: |
Ningbo-city, Zhejiang Province, China |
| (4) Capital: |
108 million US dollar (About 11.5 billion yen) |
| (5) Investment ratio: |
| Ningbo PTA Investment Co., Ltd. |
90% |
| CITIC Group |
10% |
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| (6) Managing Director/CEO: |
To be assigned from Mitsubishi Chemical Corporation |
| (7) Net sales expected: |
377 million US dollar (forecast in 2007) |
| (8) Number of employees: |
About 190 (including 14 Japanese) |
(9) Construction plan of production plant:
| i) |
Total investment: |
314 million US dollar (About 33.3 billion yen) |
| ii) |
Location: |
Daxie Island, Ningbo-city, Zhejiang Province, China |
| iii) |
Plant capacity: |
600,000 tonne/year |
| iv) |
Groundbreaking: |
July
2004 |
| v) |
Commencement of
commercial operation: |
September 2006 |
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