BASF studying $10 billion project in China

Chemical giant BASF S.E. has signed a memorandum of understanding to build its third largest chemicals complex, in the Chinese southern province of Guangdong.

The MoU, signed in the presence of German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang, calls for the building of a "Verbund" complex—an integrated value chain where a company owns businesses throughout the production process.

The project, estimated at $10 billion, marks BASF's "largest [single] investment," according to a company statement.The complex will be operated fully by BASF, and 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, Germany-based company is planning to build plants for "more consumer-oriented" products and solutions, for markets such as transportation or consumer goods.BASF said it will incorporate a "comprehensive smart manufacturing concept based on cutting-edge technologies," an apparent reference to its 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, behind its sites in Ludwigshafen and Antwerp, Belgium.

The non-binding MoU was signed in Berlin between Martin Brudermueller, 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 soon is expected to reached that of South Korea.