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AT Plastics Inc. plans to build a specialty compounding plant in the south-central United States to make ``tree-retardant'' wire and cable insulation and other materials.

Tree-retardant compounds resist failure caused by electrical stress and moisture in underground cables. The name derives from the treelike pattern one sees on cable jacketing under a microscope when the jacket fails — the compounds retard such failure. AT also said the new facility will focus on producing cross-linkable polyethylene compounds for household and radiant heating pipe markets.

AT will invest about C$25 million (US$18.3 million) in the facility, which will have clean-room conditions and which AT targets to start operating in mid-1998. Jim Donaghy, vice president of finance, said the facility will use sophisticated compounding equipment, but he would not disclose other details in a telephone interview from AT's Brampton, Ontario, headquarters.

AT will make its PowerGuard ultraclean compounds at the new U.S. plant to insulate medium-voltage cables. It has been making the materials at its Edmonton, Alberta, plant for six years. It recently introduced its tree-retardant insulation material, which it claims has twice the life of similar compounds.

Donaghy said AT's materials will help it compete against Union Carbide Corp., which has been the major wire and cable materials supplier in North America. AT's new compounding operation will source wire and cable base resins from its Edmonton plant, which it is expanding 70 percent.

AT's Flexmet is a new line of cross-linkable vinyl silane PE copolymers it claims is gaining acceptance in performance pipe markets. AT has lined up an undisclosed toll compounder to begin making Flexmet in the Midwest in the spring. When AT's U.S. compounding plant is up and running it will transfer Flexmet production there. Donaghy said AT will buy base resins in the market to convert to Flexmet.

AT is one firm trying to get household pipe market share formerly held by polybutylene resin. Synergistics Industries Ltd. of Toronto announced last summer that it may add capacity in the United States for its moisture-curable PE replacement for PB in pipe.

Donaghy said its investment in compounding ``continues AT's thrust into the high-end market.'' It also is expanding its films and packaging business.