Saudi Basic Industries, the world's largest chemicals producer by market value, said it will launch a joint venture firm with Japan's Asahi Kasei Chemicals and Mitsubishi.

The new company, Saudi Japanese Acrylonitrile (Shrouq), will build a plant to produce acrylonitrile and sodium cyanide at one of the SABIC affiliates' sites in Jubail. The facility will have capacity of 200,000 tons annually of the former and 40,000 metric tons annually of the latter, SABIC said in a statement on Wednesday.

Jubail is home to a petrochemicals hub on the east coast of the world's largest oil exporter Saudi Arabia.

SABIC did not identify the affiliate. It has announced plans to build an acrylonitrile butadiene styrene (ABS) plant at its fully-owned affiliate Petrokemya.

The petrochemicals giant benefits from access to cheap energy feedstock, giving it a competitive advantage over global rivals.

The new company, with a paid-up capital of 40 million Saudi riyals will help SABIC diversify its petrochemical portfolio to acrylonitrile butadiene styrene (ABS), carbon fiber, acrylic fiber, acrylamide which serve various industries such as automotive, construction, water treatment, oil recovery, gold mining and others, the statement quoted Mohammed al-Mady, SABIC's chief executive as saying.

The three companies will start conducting basic engineering design and will take a final investment decision in 2012.