Mukesh Ambani-led Reliance Industries has entered into joint agreement with Russian petrochemical firm SIBUR in setting up a $450 million (Rs 2000 crore) butyl rubber plant at Jamnagar in Gujarat.

The joint venture facility will have an initial capacity of 100,000 tons of butyl rubber at RIL’s integrated refining-cum-petrochemical site in Jamnagar, India and is expected to be commissioned by 2013, Reliance said in a statement to BSE.

The plant will initially produce regular butyl rubber and is expected to manufacture other types of butyl rubber specialities in the future.  SIBUR will provide its proprietary technology for butyl rubber polymerization and finishing, while RIL will supply monomers and provide the JV with world-class infrastructure and utilities. RIL will have a majority stake in the joint venture.

“This is Reliance Industries’ first ever JV with a Russian company. This JV will enable Reliance to be the first manufacturer of Butyl Rubber in India,” Reliance spokesperson Tushar Pania told VCCircle. Reliance has an existing plant for manufacturing synthetic rubber, he said, while refusing to divulge details of the stake holding.

The pact was signed as a part of the official visit of Russian President Dmitry Medvedev to India to increase trade relations between two countries. SIBUR is the largest petrochemical company in Russia and Eastern Europe.

"The setting up of domestic manufacturing of butyl rubber will fulfil a long standing demand of the Indian tyre and rubber industry and this investment is part of Reliance's vision of emerging as a significant global player in the synthetic rubber business," RIL executive director NR Meswani said, in a statement.

"SIBUR has unique technologies for the production of synthetic rubber, which in partnership with Reliance will cater the growing needs of the Indian tyre industry with high-quality raw material," said SIBUR's President Dmitry Konov.

Butyl rubber is a synthetic rubber, which is impermeable to air and used in many applications requiring an airtight rubber. It is used in the manufacture of adhesives, agricultural chemicals, fiber optic compounds among many things and is used for protecting and sealing certain equipment for use in areas where chemical weapons are present, as a gasoline/diesel fuel additive, and even in chewing gum. The first major application of butyl rubber is tire inner tubes.

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