India’s Reliance Industries and Russia’s Sibur have signed a Memorandum of Understanding (MoU) to build the first halogenated butyl rubber plant in south Asia. Signed last week at the Vibrant Gujarat Global Summit in Gandhinagar, India, the MoU will see Reliance Industries take 74.9% and Sibur 25.1% of the newly formed company, Reliance Sibur Elastomers.

Under the terms of the jv, a 60,000 t/y halogenated butyl rubber plant will be built at Reliance’s integrated site in Jamnagar, Gujarat, India. Butyl rubber feedstock will be provided by a 120,000 t/y plant which is currently under construction at the site and due for commissioning in 2018. Reliance said output from the new facility will substitute imports and reduce the outflow of valuable foreign exchange from India.

Nikhil Meswani, Reliance Industries’ executive director, said the plant will be well positioned to capitalize on the significant surge in regional demand from the tire and pharmaceutical industries. Halogenated butyl rubber is a key ingredient in the inner liners of tubeless tires, storage tank liners, and pharmaceutical stoppers, among other uses.

“Halogenated butyl rubber demand is expected to grow at a rapid pace of 8-10% CAGR over the next few years, driven by increasing customer preference for tubeless tires in India and neighboring countries, and significant investments in the manufacture of pharmaceutical closures and tank inner liners,” stated Meswani.

Dmitry Konov, chairman of Sibur’s management board, added: “India offers attractive investment opportunities given the growing local demand for synthetic rubbers and Gujarat’s favorable investment environment coupled with the well-developed infrastructure and raw material availability at a world-class industrial site owned by Reliance Industries.” Konov also mentioned that Sibur had a long track record of successful co-operation with both Reliance and Gujarat’s government, which had provided a solid base for expanding the Russian group’s footprint in the country.

Financial details of the joint venture and investment costs in the project were not divulged.