(Yicai Global) Aug. 23 -- An enlarged project plan of Wanhua Chemical Group has been approved, enabling the chemicals firm to build a plant costing CNY17.6 billion (USD2.58 billion) to make polyolefin materials including one that China has relied on overseas suppliers for.

The Shandong provincial arm of China’s development and reform commission gave Wanhua permission for the project that will make 1.2 million tons of ethylene a year and polyolefin products along with various intermediates, the firm said yesterday. Wanhua did not give details of the construction schedule, but had said earlier that it would take three years.

Thirty percent of the funding will come directly from Yantai-based Wanhua, while the rest will take the form of bank loans, it said.

The plant will be able to turn out 250,000 tons of low-density polyethylene each year. Wanhua also will build two production facilities for ethylene-octene copolymer, or POE, each with annual output capacity of 200,000 tons. 

A notable difference between this updated plan with the one Wanhua announced earlier is that the capacity of POE, used in making high-end photovoltaic cells, is doubled. To make room for the added capacity, the company has to remove a high-density polyethylene production line as well as a polypropylene production facility from its original plan.

Unlike high-density polyethylene and polypropylene, the technology to make POE, whose special molecular structure enables it to have the properties of both plastic and synthetic rubber, is still in the hands of a small number of multinational corporations, so the new facility should signify a breakthrough for domestic producers, said Liu Hairong, an analyst at Minsheng Securities. 

Yantai Chemical Industrial Park, where the new plant is set to be build, will become one of the world's biggest POE manufacturing hubs, Liu added.

Wanhua, which went public on the Shanghai bourse in 2001, is a global leader in polyurethane and its monomer manufacture. The company’s stock price [SHA: 600309] closed up 1.7 percent at CNY90.88 (USD13.33) today. Over the past 12 months, the shares have slid by more than 15 percent.

Editor: Emmi Laine, Xiao Yi