PetroChina expansion

PetroChina Co, China's biggest oil producer, said early this month it had started building an 800,000 ton-a-year ethylene plant in Chengdu, capital of Southwest China's Sichuan Province, with a total investment of 21 billion yuan (US$2.6 billion).

The plant is destined to become the biggest ethylene-making facility in the country's southwest and will serve the local market when it goes into operation before 2010, the company said. Beijing-based PetroChina will own 51 per cent of the project, with the rest held by Chengdu Petrochemical Co, a company owned by local government.

Local purchase

German auto maker Volkswagen expects to purchase spare parts worth US$1 billion from China to use in markets outside of the nation this year, up 10 times from US$100 million last year, taking advantages of China's cheaper costs.

Volkswagen is negotiating with 50 to 70 parts producers in China and one-third of the talks have progressed substantially stage. Volkswagen now has more than 800 parts suppliers in China. According to the company, spare parts from China are 20 to 30 per cent cheaper than in Germany.

Biggest investment

Royal Dutch Shell plans to invest US$500 million this year in both the upstream and downstream sectors to increase its presence in the competitive Chinese energy market. According to the company, it has invested some US$3.5 billion in China.

The new investment will be used to build new project facilities and expand existing production, from oil and gas exploitation business to downstream refining and oil retailing. The company regards the move as one of its biggest investments in China in a single year.

Stake buy

Luxembourg-based steel giant Arcelor SA has reached an agreement in principle to buy 38.41 per cent stake in Laiwu Steel Corp, China's second biggest fully integrated steel plant.

The stake is valued at 2 billion yuan (US$249 million). As the world biggest H-beam stell pruducer, Acelor would acquire Laiwu Steel's H-beam steel production line to sharpen its competitiveness in the Chinese market. Analysts regarded the timing of Arcelor's deal as a factor in trying to thwart a hostile takeover bid from steel conglomerate Mittal Steel Co.

Investment increase

Korean home appliance supplier Samsung has increased its investment in Tianjin, its North China's manufacturing base, from US$29 million to US$197 million, becoming the largest moblie phone maker on the Chinese mainland.

Company officials said Samsung is building the largest overseas mobile phone production and research and developmentbase in the city. It will expand its annual production capacity from 24 million GSM (global system for mobile telecommunications) cell phones to 42 million units and its annual sales income to US$4.6 billion.

Additional purchase

The world's biggest fertilizer enterprise, Canada-based Potash Corp of Saskatchewan Inc, recently completed an additional 10.01 per cent purchase of Sinochem Hong Kong Holdings Ltd for US$126 million.

The acquisition boosted PotashCorp's holding in Sinochem Hong Kong, the Chinese fertilizer giant known as Sinofert, to 20 per cent. PotashCorp purchased 9.99 per cent of Sinofert in June last year . The 10.01 per cent takeover finalized gives the Canadian firm the right to nominate a second member of Sinofert's board of directors.

New plant

Kingway Brewery Holdings said this month it had entered into an agreement with the management committee of the Chengdu Hi-Tech Industrial Development Zone to establish a new brewery in Chengdu at a cost of about US$100 million.

Kingway chairman Ye Xuquan said the first phase of the project, costing about US$50 million, will have an annual production of 200,000 tons.

Wine expansion

Dynasty Fine Wine Group announced recently it would invest HK$360 million (US$46 million) to boost production to 70,000 tons a year by the end of 2008, up from the current 50,000 tons, by expanding current plants and acquiring competitors.

The plan will be financed with money the firm raised through a Hong Kong initial public offering last year. Dynasty received a total of HK$700 million (US$87.5 million).

The company will invest an additional HK$340 million (US$44 million) extra to expand its sales network, in South China's Guangdong Province.

(China Daily 03/13/2006 page3)