The factory will be established at the SABIC affiliate, the National Methanol Co. (Ibn Sina) complex in Jubail Industrial City. The engineering and construction of the facility is expected to begin by 2011.

"The facility is envisaged to go on-stream by 2013, using methanol already being produced by Ibn Sina. This represents a key feedstock for the production of polyacetal," the company said.

Polyacetal is an engineered performance chemical product specifically used in automotive industries as well as in mechanical and construction fields. It also has many other industrial applications.

The new factory will boost SABIC's position in the performance chemicals industry as an important part of its 2020 strategic plan. It also provides wider prospects for the Saudi national downstream industries to enter automotive and other advanced industries.

Ibn Sina, which was founded in 1981, is a leading producer of methanol and MTBE. SABIC owns 50 percent of the company's capital while Celanese and an affiliate of Duke Energy Corporation each hold a 25 percent stake in the venture.

In a related development, Saudi Kayan signed a $426 million contract with South Korea's Daelim Industrial Co. to construct a low density polyethylene, or LDPE, plant at its petrochemical complex in Jubail.

Mutlak bin Hamad Al-Muraished, chairman of Saudi Kayan, said the plant would be ready in the first half of 2012 and would have an annual capacity of 300,000 tons.