Bayer Group Management Board Approves Bayer MaterialScience Investment Package
March 03, 2006
LEVERKUSEN -- The Bayer AG Board of Management has approved an investment package totaling EUR 700 million, which Bayer MaterialScience AG will use to expand its capacities for key products. In addition to two major projects at the Caojing site in Shanghai, the investment package also includes expansion of production in the United States and refurbishment of the future Group headquarters of Bayer MaterialScience in Leverkusen. "Approval from the Board of Management gives us the green light to press ahead quickly and as planned with the implementation of major investment projects between now and 2008," said Dr. Hagen Noerenberg, Chairman of the Board of Bayer MaterialScience. "All of the planned measures are aimed at safeguarding the long-term future of the company."
The largest project in the comprehensive package involves the establishment of a world-scale production plant for diphenylmethane diisocyanate (MDI) in Caojing near Shanghai with an annual capacity of 350,000 metric tons, which is scheduled to come online in 2008. MDI is a basic raw material in the production of polyurethane insulation materials, which is used in the entire refrigeration chain, as heat insulation in construction applications and for the thermal insulation of pipes.
Approval was also granted for expansion of the polycarbonate plant currently under construction in Caojing, which will result in a total annual capacity of 200,000 metric tons. The first phase with an annual capacity of 100,000 metric tons should be available by the middle of this year and the second phase, which will add a further annual capacity of 100,000 metric tons, is planned for completion by the end of 2007. The transparent polycarbonate Makrolon® is used in a number of high-quality applications, ranging from optical media through car glazing applications to eyewear and helmets for skiers.
The MDI and polycarbonate projects are part of a larger investment program in Caojing, some of which has already been completed. Bayer plans to spend a total of US$ 1.8 billion on the integrated site in Caojing between now and 2009. "These two new world-scale production plants mean that we are very well equipped for the future given the continued strong increase in demand for these high-quality materials in the Asia-Pacific region," noted Noerenberg.
These approved investments include the expansion of chlorine production at Bayer MaterialScience's site in Baytown, Texas, where the intention is to increase current total annual capacity from 300,000 to 500,000 metric tons. Chlorine is likewise an important starting chemical used in the production of polycarbonates and polyurethane components. As the sixth largest chlorine producer in the world, Bayer MaterialScience largely produces chlorine to service its own requirements as part of its backward-integrated production chain. The company is therefore adjusting its capacities to meet increasing demand.
The investment package also includes financing for refurbishment measures at the Bayer Chemical Park in Leverkusen. Bayer MaterialScience is provisionally set to move into its new Group headquarters at the Chemical Park at the end of 2006 or the beginning of 2007. Two buildings are currently being converted for this purpose with a focus on creating an open, communicative and motivating space for employees with modern offices and short distances between departments. Several of Bayer MaterialScience's own products are also being used in the refurbishment.
This news release contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.
