“This is a very positive decision for both the company and Site Stenungsund! Construction of the new propionic acid plant considerably strengthens our competitiveness. It also means we take yet another step toward the specialization the Group is striving for to enhance the value of our products," Lars Lind says, Site Manager Stenungsund and President of Perstorp Oxo.

The new plant will employ Perstorp's own technology and is expected to go into operation starting Q2 2006.

Perstorp’s propionic acid production is currently conducted in a multi-purpose plant that also produces 2-ethylhexanoic acid (2-EHA). This plant will be completely dedicated to 2-EHA production once the new plant is operating. Propionic acid is primarily used as an acid treatment component in animal feed, mostly for pigs and poultry.

“An EU directive that prohibits the use of antibiotics in animal feed, starting from 1 January 2006, lay the foundation for a growing segment of feed additives. Historically, growth on the propionic acid market has been 5% per year, which is expected to stand firm the next ten years. This and our earlier decision to build a new formic acid plant boost Perstorp's position on an interesting growth market," says Inge Pettersson, Executive Vice President Performance Chemicals.

The investment is part of a larger investment scheme conducted by Perstorp that will total over SEK 600 million. Other projects in the investment scheme include building a new formic acid plant, increasing the Group’s polyol production capacity and more effective power consumption. These projects are being carried out at the Group’s site in Perstorp, Sweden.