SARNIA, Ontario — Lanxess A.G. has boosted its butyl rubber capacity more than 40 percent at its Lanxess Inc. facility in Sarnia to meet ever-increasing demand worldwide.
The plant now has the capacity to produce about 135,000 metric tons of butyl annually. Together with the past year´s 10-percent, 12,000-metric-ton expansion at its other butyl facility in Antwerp, Belgium, Lanxess has invested about $69 million-about $58 million in Sarnia-to build its capacity to about 265,000 tons.
The supplier isn´t finished improving its butyl production capabilities, either. The company announced earlier this month it is preparing to expand in Sarnia again, adding 15,000 tons at a cost of about $41 million to increase capacity to 150,000 tons.
Ron Commander, Lanxess managing director and head of its butyl business, said the new expansion would be done in 2008, and the company believes it will make the Sarnia plant the largest butyl production facility in the world.
The second expansion is as necessary as the first because every pound of butyl being produced today in Sarnia has a customer´s name on it. "We´re sold out," said Commander, who, along with other Lanxess officials, talked about the projects and the butyl business at a celebration event held July 5-6 in Sarnia.
In addition, Lanxess announced in late June it wants to build another butyl plant somewhere in Asia that would be up and running by 2010. The project-estimated to cost about $540 million, the largest single investment in company history-could take place in one of a number of Asian locations, including Singapore, Malaysia and Thailand.
The company doesn´t know yet what the capacity of a new Asian plant would be.
Butyl rubber is one of Lanxess´ most important business units, representing nearly $700 million in annual sales, said Axel Heitmann, the company´s management board chairman. The business is part of the firm´s Performance Rubber segment, which accounted for more than 25 percent of corporate sales in 2006 with more than $2.23 billion in revenues.
In Sarnia, the plant makes six of the company´s seven grades of butyl, including Butyl 101-3 used for chewing gum, Commander said. About 85 percent of the butyl made at the plant and about two-thirds of the worldwide market is halobutyl, which he views as the strategic butyl market with the growing demand in radial tires.
The main thrust of the expansion in Sarnia came in three areas: a fifth reactor, an enlargement of the plant´s refrigeration operations and a new drying line, Commander said.
"We view this impressive, newly expanded facility in Sarnia as vivid proof of our commitment to the future of butyl rubber and its ability to help our world make better, safer, and more efficient products," Heitmann said.
About 86 percent of butyl made worldwide every year-nearly 1 million tons-goes toward the production of inner liners for tires. The remaining applications include pharmaceutical closures, clothing for firefighters and emergency squads, bladders for basketballs, tank coatings, vibration absorption and chewing gum, Heitmann said.
Lanxess projects the compounded annual growth rate of butyl rubber will be about 2.9 percent over the next 15 years. Commander said that translates to a need of an additional 100,000 metric tons of butyl every 31/2 years, he said.
The Asia-Pacific region will be the main driver behind the projections for butyl demand, Commander said, and is why a new plant in the region will be so vital. About two-thirds of the butyl manufactured in Sarnia already is exported, a large portion of it to Asia.
In 2004, Lanxess sold about 31 percent of its butyl to the Asia-Pacific region. This year that total is estimated to increase to 40 percent, Commander said.
Growth in the "greater China" region-including the People´s Republic and Taiwan-is forecast to rise at a 5.3-percent compounded annual rate. And Japan, with its active production of vehicles and tires, accounts for about 22 percent of the world´s halobutyl demand, he said.
India is a huge potential market as well for Lanxess, with projected compounded annual growth of 5.5 percent for butyl demand. The use of butyl rubber is forecast to grow in central and eastern Europe, too, Commander said.
As for the U.S., while general-purpose tire manufacturing is moving away from the country to emerging markets, non-tire butyl demand is projected to increase over the next several years, he said. The overall butyl rubber business in the Americas — the U.S., Canada, Mexico and Latin America — is expected to grow at a compounded annual rate of about 1.6 percent over the next 15 years.