THAILAND: Thai Hua plans B5 billion tyre plant in Rayong - Partner makes first foray outside China

Thai Hua Rubber plans to set up a tyre production plant valued at 5 billion baht in Rayong.

The factory will be a joint venture with Hangzhou Zhongce Rubber Co, the first investment by the Chinese company outside China.

Thai Hua CEO Luckchai Kittipol said the plant would start production in 2012 with an annual capacity of 10 million tyres, 90% of which would be exported to Europe, the United States, China, Australian, Japan and Asean.

The exact investment proportion has yet to be finalised, but Mr Luckchai said Thai Hua would prefer controlling about 15-30% of the joint investment.

"The joint venture would help upgrade Thai Hua to another level from a rubber planter and exporter of upstream and midstream raw materials," he said. "The venture would also ensure sustainable growth of the company's business in the longer run."

Aside from Hangzhou Zhongce Rubber, the world's 12th largest tyremaker, other Chinese tyre producers are interested in Thailand because of the benefits from the Asean Free Trade Area and the China-Asean FTA, he said.

Thai Hua currently has combined production capacity of rubber (latex, rubber sheet and block) totalling 380,000 tonnes, about 300,000 tonnes of which are for export and the remainder for domestic consumption. This year's revenue is estimated at 32-33 billion baht, a healthy increase of 50% from a year earlier.

According to Mr Luckchai, exports next year will rise to 420,000 tonnes as production increases. Its rubber block production facility of 60,000 tonnes at Buri Ram is due to be completed next year. Another rubber block plant with a capacity of 60,000 tonnes in Yasothon will be finished by the end of 2012.

The company expects to invest about 1.5 billion baht each in 2011 and 2012.

Outside Thailand, Thai Hua has invested US$20 million in a 200,000-rai (one rai=1,600 sq m) rubber plantation in Laos. It expects the first shipments in 2013 when the rubber trees are mature.(Syed Rashid Ali, Karachi, Pakistan)