TOKYO -- Japan's Mitsubishi Chemical will pump slightly over 100 billion yen ($915 million) into the construction of a resin manufacturing factory in Louisiana, Nikkei has learned.
The company wants to increase the production of methyl methacrylate, or MMA, in the U.S. The raw material is used to manufacture acrylic resins, which are used in a variety of things, including auto parts and house paint.
The factory will start operations in 2025 with an aim to reach annual production capacity of 350,000 tons, making it the world's largest factory accounting for about 10% of total global demand.
In 2020, Mitsubishi Chemical accounted for about 40% of the total global demand for MMA. The new factory will raise Mitsubishi Chemical's overall supply capacity by 20%.
The company has already acquired the site and is hashing out further details. Its overall investment could increase to around 150 billion yen.
Mitsubishi Chemical plans to introduce its proprietary manufacturing process, which it uses at its Saudi Arabia plant, at the new factory. The cost of manufacturing is believed to be less than half of that of their Chinese counterparts who use general manufacturing methods. Mitsubishi Chemical is able to reduce production costs by using ethylene derived from U.S. shale gas.
In the U.S., President Joe Biden has introduced large-scale economic measures, as well as policies to support domestic production by imposing tougher rules on government procurement practices.
Expectations for economic growth are rising in the U.S., prompting a number of companies to construct local factories, including Nippon Steel and Shin-Etsu Chemical.
The U.S. is attracting investments from around the world as many companies consider the country a global production hub.
According to Japan's Ministry of Finance, foreign direct investment by Japanese companies reached nearly 5.9 trillion yen during January to March, up 5.4% from a year ago. Investments into the U.S. increased about 40% to almost 2.5 trillion yen. The figure is a big jump compared even to before the coronavirus outbreak, representing an increasing of about 40%.
Meanwhile, investments into China declined 45% in the three months through March to 184 billion yen.