KUALA LUMPUR: Germany's BASF and Petronas Chemicals Bhd will invest US$500mil (RM1.5bil) to expand their operations at Gebeng, Kuantan to manufacture products for the global flavour and fragrance industry.
According to the joint statement on Friday, the investment would be in an integrated aroma ingredients project at their existing joint venture site.
"With this investment, the partners will help meet the globally growing demands of customers in the flavor and fragrance industry, especially in Asia Pacific," they said.
BASF and Petronas Chemicals said at the heart of the complex would be a plant for citral and precursor plants. They would also invest in downstream production for aroma ingredients including a new world-scale plant for L-menthol and a plant for citronellol.
Production will be developed in phases, with the first plants of the project operational in 2016, creating some 110 new jobs.
President Asia Pacific BASF, Saori Dubourg said this strategic investment would enable them to increase their contribution to the aroma ingredients market to bring attractive fragrances and flavours to our daily lives.
"Embedding this investment into our Kuantan Verbund allows our customers to benefit from a global production network for their future growth plans in the Asia Pacific region," said Dubourg.
Petronas Chemicals chairman Datuk Wan Zulkiflee Wan Ariffin said the integrated aroma chemicals complex would open up a new business frontier tapping into the flavors, fragrance and pharmaceuticals markets.
"This indeed presents exciting prospects for the company, as we endeavor to provide innovative customer solutions," he said.
Citral is nature-identical to the main component of many essential oils like lemongrass, and is used as fresh-citrus and fruity notes in fragrances and flavors. It is also used in the production of vitamins A and E and as precursor for aroma ingredients.
Citronellol is used for a fresh, powerful, and long-lasting rose fragrance, and is an indispensable component for numerous fresh-floral compounds. The cool freshness of L-menthol makes it popular as an ingredient in numerous products in oral care, body care, flavourings and in pharmaceutical applications.