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Industry News
Synthetic rubber projects fulfil strategic GCC role

Industry News
Synthetic rubber projects fulfil strategic GCC role
Rubber for use in the emerging automotive sector in Saudi Arabia will soon be produced domestically

Saudi Arabian companies have started to add the performance chemicals elements to the Kingdoms planned automotive cluster, one of four downstream areas that are seen as
vital for future development.

Kemyas synthetic rubber plants in Al-Jubail are expected to start up later in 2015 to help meet growing demand in transportation as well as other industrial sectors.

And Saudi Aramco agreed in September this year to take a 50% stake in the synthetic rubber business of Germanys LANXESS. The world-class operation can help supply
rubber products to the automotive sector in Saudi Arabia as well as other outlets in the Middle East.

It could be integrated back to butadiene from the giant Sadara Chemical joint venture complex which is nearing completion in Al-Jubail.

Kemya is a joint venture between SABIC and US energy giant ExxonMobil. The Saudi chemicals producer said earlier this year that: SABICs synthetic rubber will meet
emerging demands from transportation, building construction, industrial solution as well as consumer and well-being, driven by urbanisation and increased consumerism in
China and Asia.

The high performance synthetic rubber plant will provide a domestic supply of more than 400,000 tonnes/year of rubber butyl rubber, styrene butadiene rubber (SBR),
butadiene rubber and ethylene-propylene-diene monomer (EPDM) a thermoplastic specialty elastomer and carbon black.

The Kemya elastomers facility demonstrates our commitment to build and champion a first-rate rubber industry in Saudi Arabia that supports job creation, develops
downstream industries and helps diversify the national economy, the then CEO of SABIC Mohamed Al-Mady said when the project was announced.

As part of the project, the two partners have established the High Institute for Elastomer Industries (HIEI), a world-class elastomer technology vocational training institute in
Yanbu, Saudi Arabia. The first class of students started in September 2012 and it is hoped they will become the technicians that will help build the emerging elastomers industry
in Saudi Arabia.

A product services center has also been created in Riyadh, to support local customers in the rubber conversion industry with technical service and new product development.

Downstream commitment

Downstream from synthetic rubber, Saudi Arabia is committed to developing a national automotive cluster. It wants to design and build cars, trucks and buses as well as the sub-
systems to supply the industry.

The Ministry of Commerce and Industrys Industrial Clusters programme has set a target of production of 600,000 cars a year by 2025.

Isuzu Motors and Saudi Industrial Property Authority (Modon) have developed a $100m, 120,000 sq m integrated assembly factory for trucks and cars in Dammam. It is
expected to be producing 25,000 trucks a year by 2017, with 40% for export. The plant could generate 800 new jobs.

Jaguar Land Rover had been expected to start car production in the Kingdom but the car makers project has recently been abandoned.

Aramco investment
Saudi Aramco has agreed to pay 1.2bn for its stake in the new business entity with LANXESS. This is yet another major step forward in Saudi Aramcos globally-integrated
downstream expansion strategy. It will further enhance our competitive position in integrating our diverse portfolio, the oil giants president and CEO, Amin Nasser, said in
September.

Partnering with a world-class company like LANXESS will help scale up our global presence, and in turn create more opportunities for sustainable growth in Saudi Arabia and
in markets around the world, he added.

Saudi Aramcos, senior vice president downstream, Abdulrahman Al-Wuhaib, described the strategic opportunities, for Aramco, Saudi Arabia and the Middle East region in
general. Through the joint venture agreement we are investing in a world-class synthetic rubber and elastomer products capability that already supplies many of the worlds
largest tyre and automotive-parts manufacturing customers, he said.

In addition to creating a new revenue stream for Saudi Aramco, the agreement will spur economic growth and diversification opportunities for the Kingdom of Saudi Arabia
and the Middle East region in high-volume sectors, such as tyre and auto-parts manufacturing, that are dependent on higher-margin, value-added chemical products.

The operations being contributed to the venture by LANXESS include its Tire and Specialty Rubbers (TSR) and High Performance Elastomers (HPE) business units, including
20 production facilities in nine countries and 3,700 employees.

The 50:50 venture will be headquartered in the Netherlands.

Article written by Icis.

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