BOREALIS SCRAPS CHINA PLAN, EXPANDS IN FINLAND

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Europe's top polyolefin producer, Borealis A/S, plans to invest $6 million to expand capacity for specialty polyethylene resins from 264 million pounds per year to nearly 309 million pounds per year at its plant at Porvoo, Finland.

Borealis of Lyngby, Denmark, aims to meet strong growth in demand for linear low and high density PE resins for pipe and films markets.

Meanwhile, Borealis announced that it has decided to scrap plans for a 50-50 joint venture PE plant in China.

Borealis had signed a letter of intent with the Chinese state petrochemicals monopoly, Sinopec, in 1995, to establish the plant at Qilu Petrochemical Corp. in Zibo, China.

But negotiations broke down and the plan was shelved because ``the present conditions of the joint venture do not meet Borealis' investment criteria,'' according to Juha Rantanen, Borealis president and chief executive officer.

Frustration with red tape, rules restricting the import of some equipment for the plant, the slow progress of talks, and disagreement over the use of Borealis' production technology all contributed to the pullout, according to a spokesman.

He said Borealis is inexperienced in establishing joint ventures in Asia and had been negotiating a steep cultural learning curve in its first attempt.

Even so, the company does not intend to give up on China altogether. In the first quarter of 1997, Borealis said it will keep talking with Sinopec to ``find another suitable opportunity for joint cooperation.'' This could involve production of polypropylene, the spokesman said.

Borealis already is committed to another major venture outside Europe, also designed to serve the Asian market. Last year the company signed a Middle Eastern deal with Abu Dhabi National Oil Co. to build a petrochemical complex, including two PE plants with 992 million pounds per year of capacity, at Ruwais, United Arab Emirates.

That project, in which Borealis has a 40 percent stake, is due to start up in late 2000.

In Finland, resins produced by the 2-year-old Porvoo unit are used for agricultural, industrial and technical films and pipe sectors. It largely serves the European market, although pipe products made with resin from the PE plant, which will be expanded, are supplied worldwide, according to Borealis.