RIL to set up synthetic rubber manufacturing plant with Sibur

RIL to set up synthetic rubber manufacturing plant with Sibur

Mumbai: India’s most valuble company, Reliance Industries Ltd (RIL) will set up a synthetic rubber manufacturing plant in a joint venture with Russian petrochemicals maker Sibur OAO, seeking to tap growing demand from the automobile industry.

The venture will produce “butyl rubber", or synthetic rubber, at RIL’s integrated petrochemical complex in Jamnagar, Gujarat, the company said in a statement announcing the agreement.

The Russian company will “provide proprietary technology for butyl rubber polymerization and its finishing, while RIL will supply monomers and provide the joint venture with world class infrastructure and utilities", said the statement.

RIL officials declined to specify the holding pattern of the joint venture or the investments being made by the two companies.

Synthetic rubber is impermeable to air and is highly flexible, and is commonly used in the inner tubes of tyres.

It has also found its way into the manufacture of adhesives, agricultural chemicals, fibre optic compounds, paper pulp and personal care products.

An RIL spokesperson said the Indian rubber industry was “growing rapidly on the back of automobile demand in India and the subcontinent".

The company said the rubber plant will be on top of its plans to expand the Jamnagar petrochemical complex, as announced by chairman Mukesh Ambani in November.

The RIL refining complex is the world’s largest, with the capacity to process around 1.2 million barrels of crude a day.

The association gives Sibur, which operates plants in 20 regions of Russia to produce at least 2,000 products, a foothold in the fast growing Asian market.

“The creation of a new capacity in close proximity to the Asian markets provides both Sibur and Reliance with exciting opportunities. Rubber consumption in Asia has shown strong growth in recent years, triggered by increased volumes of tyre production," Sibur’s president Dmitry Konov said.

Sibur earned around 150 billion rubles (Rs22,500 crore today) in revenue in 2009, according to the RIL statement. It operates across the petrochemical value chain—from gas processing to the production of plastics, synthetic rubber, mineral fertilizers, tyres and industrial rubber goods, as well as the processing of plastics.

RIL appears to be on a collaboration spree, marking a shift from its earlier do-it-yourself strategy.

In early April, it forged a 40:60 joint venture with US-based Atlas Energy Inc. for $1.7 billion (Rs7,667 crore today) to participate in the extraction of natural gas from shale sand assets and and learn the technology.

In an industry conference on Friday, Ambani had stressed the need for innovative thinking and “creative solutions" in the petrochemical industry as it sought to satiate the huge demand from Asian countries, especially India and China, which are witnessing a boom in the purchasing power of their populations.