ESSEN, Germany—Evonik A.G. said it is planning to make its largest investment in North America in the past five years with a new production plant for precipitated silica, located in the U.S.
The firm said in a news release that the investment will be in the double-digit million Euro range, but it did not disclose exact investment figures.
The overall project needs the approval of relevant government authorities, Evonik said. The firm would not disclose how many jobs the new plant would create or the physical size of the building.
Completion is scheduled for late 2017. Hans-Detlef Luginsland, vice president, product line, rubber silica, said in an email that engineers already have started working on the project.
“Evonik is on a growth path,” CEO Klaus Engel said in a statement. “In planning this new silica plant, we are preparing our largest North American investment of the past five years. By doing so, we will continue to strengthen our leading market position as a silica supplier.”
Evonik is targeting a site in the Southeast U.S. to be in close proximity to large tire producers, but it did not specify a location. Goodyear, Michelin, Bridgestone Corp., Continental A.G., Pirelli Tire L.L.C., Toyo Tire & Rubber Co. Ltd. and Yokohama Tire Corp. all operate tire manufacturing plants in the Southeast U.S. with more set to come online from Yokohama, Hankook Tire Co. Ltd. and Giti Tire Group.
The firm will produce its Ultrasil brand of rubber silica products at the new facility—which are reinforcing fillers for the rubber industry—Luginsland said. In addition to the tire industry, the product line is used in hoses, belts and rollers.
“The U.S. market is a growing economy for our core industries, such as the automotive and tire industries,” Luginsland said in an email. “In the recent years, not many investments in the U.S. silica industry have been done, and the raising demand is an opportunity to participate at the growth with locally produced products.”
Evonik said its main motivation for establishing a new plant in the U.S. is to continue offering its customers high quality silica combined with customized service and high supply reliability. It cites growing demand for highly dispersible silica, specifically influenced by North American economic dynamics and above average sales growth for tires with reduced rolling resistance.
Luginsland said the firm projects steady growth of locally produced tires driven by new tire manufacturing capacities on stream or currently under construction. Evonik predicts an over-proportional growth of the higher-value tire segment produced in the U.S., while a high import ration for lower-value budget tires is likely.
The firm said manufacturers using a silica-silane combination are able to produce tires that allow for fuel savings up to 8 percent because of significantly reduced rolling resistance compared to conventional passenger car tires.
“We are going to continue expanding our precipitated silica capacity—a global program that we started five years ago,” Johannes Ohmer, management member of the Resource Efficiency Segment, said in a statement. “The resource efficiency megatrend fuels the demand for our products. Interest in energy-saving tires is continuously growing in North America. That's why we are planning to build the plant close to our customers—the large tire manufacturers.”
Evonik said that between 2010-14, it had increased its global capacity for precipitated silica by about 30 percent. In September 2014, Evonik expanded its facility in Chester, Pa., for additional annual production capacity of about 20,000 metric tons.
The firm operates a colloidal silica plant in Portland, Ore.; and it produces fumed silica in Waterford, N.J.; and Mobile, Ala.
Luginsland said the new plant primarily will service the NAFTA region. Evonik is currently constructing a silica production facility in Brazil, also targeted to be complete by the end of 2017.
Evonik is a world producer in specialty chemicals, active in more than 100 countries with more than 33,000 employees and fiscal 2014 sales of about $14.1 billion.