German chemical giant BASF SE has signed a memorandum of understanding (MoU) to build its third largest chemicals complex, in the Chinese southern province of Guangdong.
The MoU, which was signed in the presence of German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang, envions the building of a so-called "Verbund" complex — an integrated value chain where a company owns businesses throughout the production process.
The project is estimated at $10 billion and will mark BASF's "largest [single] investment," the company announced July 9.
The complex will be fully operated by BASF. Construction is expected to be complete by 2030, with some parts of the project expected to launch by 2026.
In the initial phase, the project would consist of petrochemical plants, including a steam cracker with a planned capacity of 1 million metric tons of ethylene per year.
Later, the Ludwigshafen-based company is planning to build plants for “more consumer-oriented” products and solutions, for markets such as transportation or consumer goods.
BASF says it will incorporate a “comprehensive smart manufacturing concept based on cutting-edge technologies,” an apparent reference to the company's ambition to create an advanced, connected Industry 4.0 environment at the new complex.
Ultimately, BASF expects the site to be its third-largest worldwide, following Ludwigshafen, Germany, and Antwerp, Belgium.
The non-binding MoU was signed in Berlin between Martin Brudermüller, BASF's chairman, and Lin Shaochun, executive vice governor of Guangdong province.
With more than 110 million residents, Guangdong is the most populous province in China. Its gross domestic product, currently growing at 7 percent annually, already exceeds that of Spain and is "soon" expected to reached that of South Korea.