Momentive Performance Materials Inc. said Tuesday it will build a 97 million US dollars plant for siloxane in China with a local partner, to tap growing demand.

The US company said it has won Chinese government approval to set up the manufacturing venture with Zhejiang Xin'an Chemical Industrial Group Co., China's leading silicone manufacturer.

The venture, to be located in Jiande, eastern Zhejiang Province, will have initial annual capacity of 50,000 tons of siloxane, or approximately 100,000 tons of silane products, when it becomes operational in the first half of 2009. Shanghai-listed Xin'an will own 51 percent.

The plant would be one of the largest in China in terms of capacity, according to Everbright Securities analyst Zhang Liyang.

Siloxane can be found in a wide range of silicone products from cosmetics and tires to labels.

Jonathan D. Rich, president and chief executive officer of Momentive, said the new project will help the firm expand upstream business in China to support its several silicone finishing operations in the region.

"We will increase our investment continuously according to our plan," Rich told a media conference in Shanghai.

Momentive was created from the sale of GE Advanced Materials to private equity firm Apollo Management LP in December last year. It is the world's second-largest producer of silicones and silicone derivatives.

Xin'an shares rose 2.61 percent to 44.01 yuan (5.80 US dollars) Tuesday, outperforming the Shanghai Composite Index which added 0.68 percent.

(Shanghai Daily August 2, 2007)