It is about fifteen months since senior BASF executives were in Bahrain to break ground on the German chemical giants first investment in the small yet strategically-located kingdom.

As investment values go the new facility, which makes additives used in plastic manufacturing, is relatively small. BASF will not confirm a figure, but it is estimated to be in the tens of millions of dollars range.

But according to BASF Plastic Additives, a unit of the worlds largest chemical company, the Bahrain project strengthens its position as the leading partner for the plastic processing industry worldwide and shows its strong commitment to support the growth of the polymer industry in the Gulf Co-operation Council (GCC).

The plant, which was inaugurated last month at the Bahrain International Investment Park (BIIP), an industrial zone located near the countrys biggest seaport, is also a significant feather in the cap for the kingdom, which is slowly rebuilding economic confidence following almost two years of political uncertainty said to have deterred some foreign investors.

To get a world-leading multinational like BASF to invest in a country, that country must do many things right, says Harald Kroll, BASFs Dubai-based regional managing director.

You only invest if you can be sure of a long-term safe investment, he told The Gulf at the new site as the final preparations for the inauguration ceremony were under way.

While simmering political tensions and street protests, occasionally violent, have led some observers to question the business-friendly credentials touted by Bahrains Economic Development Board (EDB) prior to 2011s unrest, BASF executives insist the competitive advantages which led the company to consider the kingdom for its investment more than three years ago are unchanged.

We chose Bahrain for a number of reasons, says Frank Fasdernes, business management director for BASFs plastic additives business for Eastern Europe, Africa and Western Asia.

First it is located close to customers in the Middle East. Second, it has an outstanding logistics infrastructure ensuring the smooth flow of imported raw materials and exported finished product into the regional market. This means we can react more flexibly to our customers supply needs.

Third, it was also important for BASF, which issues more than 1,000 patents every year worldwide, to select a location which offers strong protection for intellectual property. Because we were able to have 100 per cent ownership of the Bahrain project we have been able to assume greater control over the patented technology which runs the plant, he continues.

Both BASF executives make the point that the engagement with the local authorities, from the industry and commerce ministry to the EDB and BIIP management, left a positive and lasting impression.

The end result is that we were able to deliver a world-scale plant on time, despite an ambitious development timeframe, and are ready to provide regional customers with a more flexible local supply with shorter delivery lead times, says Fasdernes.

The 15,000 square metre plant is, according to BASF, the largest of its type in the world. Its annual output capacity of 16,000 metric tonnes of customer-specific (bespoke) antioxidant blends, or CSBs, will supply plastic manufacturers in the GCC and wider Middle East. The German company says the facility complements the companys global network of plastic additives plants in Asia, Europe and the Americas, as well as a polymers plant in Dammam, Saudi Arabia, which operates BASF-owned CSB production lines under a recently-extended agreement.

This expanded regional production capability is seen by observers as integral to BASFs goal to build its plastic additives business following its 2009 acquisition of speciality chemicals company Ciba. Today, BASF says it is a leading manufacturer, supplier and innovation partner of additives and pigments for the plastics industry, with products such as ultraviolet light stabilisers, antioxidants and process stabilisers, organic and inorganic pigments, effect pigments, and other additives.

The Bahrain plant is commissioned against a healthy market backdrop, says Kroll.

BASF considers the Middle East an important growth market for plastic additives for applications in industries like oil and gas, construction and utilities such as water, says Kroll.

The plastic manufacturing market in the region and in particular Saudi Arabia, Qatar, the UAE and Kuwait is growing at double digits. We cant be sure how long double digit growth will last, but we are confident this was the right time to make this investment in Bahrain, reinforcing the companys leadership position in the Middle East plastic additives market, he adds.

The Gulf Petrochemicals and Chemicals Association (GPCA) estimates annual GCC plastics output will grow by 73 per cent by 2015 to 23.6 million tonnes. The GPCA also forecasts regional annual plastics consumption will grow 22 per cent to 5.5 million tonnes by 2015. By 2020, it reckons the GCC will be the worlds second-highest per capita plastics consumer.

We already have offtake agreements in place [for the new plant], Kroll confirms, adding that because the plant manufactures a tailor-made product, it is critical it maintains sufficient production capacity.

Kroll points out that BASF is able to keep its supply commitments to its customers thanks to its global set up and supply chain network, with diverse raw material sources.

Kroll also confirms that the highly advanced, zero emissions plant has scope for future expansion should future demand patterns dictate, though they stress there are no immediate plans to do so at this stage.

The plant closes another part of the BASF product supply circle in the Middle East, where it already sells a range of products including industrial chemicals, petrochemicals, gas purification, oilfield chemicals, sea water desalination, packaging, engineering plastics, plastics additives, paints, coatings and inks and construction sector products. The company employs more than 750 people in the region, and the new plant is expected to provide skilled employment for a number of Bahrainis.

It is always BASFs goal to provide employment for local citizens wherever we operate, and in Bahrain 70 per cent of the plant workforce is local. In fact, good quality labour availability was another important factor in choosing Bahrain as an investment location, says Kroll, pointing out that in addition to local training, knowledge transfer also takes place in Switzerland and Germany.

Fasdernes believes all the ingredients are now in place for BASFs Bahrain investment to play a vital role in the regional strategy of a Group which made 73.5 billion ($97.2 billion)-worth of sales worldwide last year.

Our job now is to prove our business case was justified. We are confident that it is, Fasdernes concludes.