(Yicai) July 17 -- Saudi Aramco’s chemicals business subsidiary Saudi Basic Industries Corporation will acquire a stake of up to 50 percent in the advanced materials project of private Chinese petrochemical giant Rongsheng Petrochemical in Zhoushan.

SABIC signed a deal with Rongsheng to jointly advance the development of the Jintang New Materials Project in Zhoushan, China's eastern Zhejiang province, the Chinese firm announced yesterday. The investment ratio, transaction structure, and price will be determined at a later stage.

Rongsheng unveiled the Jintang New Materials Project in 2024, with a total investment of CNY67.5 billion (USD10 billion). It is designed to enhance production capabilities for advanced chemical materials, such as fine chemicals, high-end resins, engineering and biodegradable plastics, and special polyester, and support growing demand from key downstream industries in China and Asia.

"The collaboration represents a landmark partnership and a model of win-win cooperation between Rongsheng and SABIC," said Xiang Jiongjiong, chief executive officer of Rongsheng. "This partnership is a flagship outcome of two industry leaders complementing their strengths and robust capabilities to jointly research, develop, and operate in advanced chemical materials."

The two companies also plan to sign a series of supporting agreements for this partnership, such as technology license agreements and technology service agreements, and carry out comprehensive cooperation on related advanced technology applications, Rongsheng noted.

In a separate statement yesterday, Rongsheng unveiled that it plans to invest CNY19.6 billion to build new production lines at its existing oil refineries to maximize the utilization of by-products. The project, with a post-tax payback period of 8.9 years after a two-year construction period, is expected to bring a net profit of CNY1.4 billion (USD206.6 million) a year.

Saudi Aramco completed a CNY24.6 billion strategic investment in Rongsheng in July 2023, becoming its second-largest shareholder with a 10 percent stake. The pair signed a series of cooperation agreements back then, including a crude oil purchase deal.

Rongsheng's shares [SHE: 002493] closed 1.7 percent up at CNY11.33 (USD1.67) today. The Shenzhen Component Index plunged 5.4 percent.

Editor: Futura Costaglione