(Yicai) Sept. 15 -- Shandong Link Science and Technology will invest CNY1 billion (USD149.1 million) to build a rubber reinforcing filler factory in Egypt to get closer to overseas target markets, reduce logistics and tariff costs, and improve response speed for international customer needs.

Located in the Suez Canal Economic Zone, the plant will have an annual output capacity of 100,000 tons of silicon dioxide and 100,000 tons of carbon black, the Chinese company announced late yesterday. Construction is expected to last 18 months.

Silicon dioxide and carbon black are important reinforcing fillers for tires. Moreover, adding silicon dioxide to tires can reduce their rolling resistance, helping vehicles cut fuel consumption and carbon emissions.

Link Science did not mention the target customers of the factory, but based on its semiannual earnings report, its major Chinese and international tire manufacturing clients are Goodyear, Linglong Tire, and Sailun Group.

Egypt is becoming a popular investment destination for Chinese tire makers. On Sept. 3, Linglong Tire’s parent company signed a memorandum of understanding with the Egyptian Ministry of Trade and Industry‌, planning to invest about USD2 billion to build plants to produce tires and related materials, including carbon black, in the African country.

Sailun announced three plans to build and expand its tire factories in Egypt between August last year and June this year, with a total investment of over USD1.7 billion. In May, Chinese commercial tire supplier Aeolus Tyres unveiled a CNY2.7 billion investment to build a plant in Egypt.

Link Science has a designed annual production capacity of 230,000 tons of silicon dioxide and 225,000 tons of carbon black. In the first half of the year, revenues from its silicon dioxide and carbon black businesses were CNY531 million and CNY713 million (USD79.1 million and USD106.3 million), accounting for 42 percent and 56 percent, respectively, of the total revenue for the period.

Overseas market revenue accounted for only 4.4 percent of Link Science’s first-half revenue.

Shares of Link Science [SHE: 001207] closed 1.5 percent down at CNY17.08 (USD2.55) in Shenzhen today.

Editor: Futura Costaglione