The UK has fought off competition from Holland to win an pounds 80m investment by ICI to expand its plastics facility at Wilton, on Teesside.
ICI is receiving a pounds 1.9m regional selective assistance grant from the Department of Trade and Industry, which is aiming to turn Teesside into the "chemicals capital" of Europe. The DTI said the money was justified because the investment was creating 50 new jobs and safeguarding 250 more.
ICI is expanding its European capacity to make a substance called plastic polyethylene terephthalate, used extensively in bottles for carbonated drinks and other packaging, by 130,000 tonnes a year. The company estimates that demand for PET will grow at more than 10 per cent a year until at least the end of the century.
This is the third large chemicals investment in Teesside since the Government announced its chemicals initiative, an idea aimed at creating a centre of excellence in the area.
ICI had already announced an investment to expand aniline production, and DuPont, the American chemicals group, is investing in its nylon facility. Tim Eggar, industry minister, who announced the initiative earlier this year, said it aimed to bring together public and private organisations operating in the chemical sectors.
He said: "The initiative has got off to a cracking start. As these investments come to fruition, I believe a critical mass of chemical manufacturing will be reached on Teesside making it the 'silicon valley' for the chemical industry."
ICI was considering siting the facility in Holland. Mr Eggar said the RSA grant was "a substantially lower amount of state aid than we believe the Dutch were offering".
As a result of the Government's initiative to promote Teesside, Du Pont earlier this year abandoned plans to close its plant, instead announcing that it was turning the plant into the group's only supplier of nylon intermediates.
Deryk King, managing director of ICI's world-wide polyester business, said the market for PET was growing strongly. Competitors were adding new capacity to meet current product shortages, he said.
ICI already has a 100,000-tonne PET plant under construction in Fayetteville, North Carolina, due on stream in the fourth quarter of this year. The company said both plants would undergo further upgrades after construction, bringing world-wide PET capacity to nearly half a million tonnes a year by 1999.