WASHINGTON, D.C., June 9—The International Finance Corporation (IFC) recently signed agreements to invest US$46.7 million in Suzhou Huasu Plastics Co., Ltd. (SHPC) to finance the construction of a US$90 million polyvinyl chloride (PVC) resin and film manufacturing facility in China. The new company--located in the Liujia Port Economic Development Zone in Suzhou, Jiangsu Province--will operate a 100,000 tons per year PVC resin plant and a 24,000 tons per year film calendering facility.
PVC is a major commodity plastic used in industrial and consumer products such as pipes, fittings, wire cables and bottles. The calendering process converts PVC compounds into PVC film and sheets.
China's economic growth has led to a sharp increase in demand for petrochemicals and thermoplastics. In recent years China has imported PVC because of insufficient supply by domestic manufacturers.
The project's output will be sold in the domestic and export markets. The new company will be the first petrochemicals joint venture project in Suzhou providing a vehicle for the transfer of modern technology and know-how. Completion of the plant is planned for early 1999. It will import vinyl chloride monomer, which is the main raw material for PVC production
The joint venture partners are the Westlake Group based in Houston, Texas, which is a producer of plastics and petrochemicals; Norsk Hydro a.s.a., Norway's largest publicly-owned industrial concern; China Jiangsu Pesticide Group Company; and China Taicang Petrochemical Company. IFC's financing package includes a US$22 million loan for its own account, a US$2.5 equity investment and a US$22.2 million loan for the account of participating banks--Christiania Bank og Kreditkasse ASA, Den norske Bank ASA and Dresdner Bank Luxembourg S.A. The Norwegian Agency for Development Cooperation (NORAD) is cofinancing the project with a US$3.8 million equivalent loan.
Mr. James Chao, Chairman of SHPC and Vice-Chairman of the Westlake Group said at the loan signing in Houston, "We are very happy to contribute to the modernization of China's chemicals industry by providing high quality PVC resin and film at competitive costs to help reduce dependency on imports."
Mr. Jean-Philippe Halphen, Director of IFC's Chemicals, Petrochemicals and Fertilizers Department, added, "IFC is pleased to support a project which, through its exports and substitution of its output for imports, will generate substantial foreign exchange for China. The availability of quality PVC resin and film will assist the further development of labor intensive downstream processing industries in the Shanghai region. We are also delighted to bring long- term limited recourse financing to a quality joint venture."
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
