Rising building costs stall Mitsui's decision on plant

Aug 15, 2008
Rising building costs stall Mitsui's decision on plant
By Bryan Lee

JAPAN'S Mitsui Chemicals is considering sinking a few hundred million
dollars into a new major manufacturing plant in Singapore, but
surging construction costs are complicating the decision.

The company, which was presented yesterday with Singapore's top
corporate accolade, said a 20 to 30 per cent hike in costs is
weighing heavily on its final decision, which it hopes to make in the
next few months.

But it is going ahead with expansion plans for its research and
development (R&D) centre here, as well as internship and scholarship
programmes for Singaporean students.

Mitsui, which has invested more than $1 billion in Singapore over the
past 42 years, is considering building a second phenol plant that
will be at least as big as an existing one it opened in 1998.

It announced this as it received the Distinguished Partner in
Progress Award, which recognises leading firms for their significant
contributions to Singapore.

The proposed factory is slated to have an annual capacity of 250,000
to 300,000 tonnes and may create 160 jobs - about the same as the
number of jobs at the existing plant.

And, like the $540 million plant on Jurong Island, it will make the
key intermediate chemical needed to produce plastic resins used to
make CDs and DVDs.

'We are making an all-out effort to realise the establishment of a
new-generation phenol plant,' said president and chief executive
Kenji Fujiyoshi at an award presentation lunch at the Raffles Hotel.
But 'construction costs have risen very rapidly so we are now
reviewing these factors', he said later.

But it is full steam ahead for plans to beef up its R&D operations.
It is moving into a 1,200sqm space in a new research facility in
Science Park III at the end of next year. The move will accommodate a
trebling of researchers, from fewer than 10 to at least 30.

Mitsui announced yesterday that a joint effort with the Agency for
Science, Technology and Research (A*Star) has yielded a new catalyst
for the production of benzene from methane, the main component of
natural gas, instead of crude oil.

It is also starting a scholarship programme that will sponsor at
least two local students for studies in Japan. The scheme is aimed at
helping the company secure talent for further expansion here.