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Shell acquisition to more than double bitumen business in China

Shell China Holdings B.V. announced that it has signed an agreement to acquire Koch Materials China (Hong Kong) Limited (KMC), which is involved in the manufacture and marketing of bitumen in China.

The deal will more than double the size of Shell's bitumen business in the country. KMC has interests in companies operating six bitumen manufacturing plants in Tianjin, Xi'an, Foshan, Zhenjiang, Ezhou and Luzhou, with a total production capacity of about 4,200 tons per day, two mobile plants and a supporting technical laboratory in Beijing.

KMC is an affiliate of Koch Materials LLC, a historically-recognised leader in the manufacture and marketing of technically advanced bitumen products and services used in road construction and maintenance.

Shell bitumen products are currently produced in five plants in China in Zhapu, Tianjin, Nanjing, Mawei and Qinzhou, with a total production capacity of 2,400 tons per day.

The Executive Chairman for Shell Companies in China, Lim Haw Kuang, said, "This is an exciting opportunity for Shell in China and one that underscores a commitment to developing the downstream business portfolio. China is one of Shell's key strategic markets in the world and we are committed to growing our presence where viable opportunities are identified that offer potential for earnings growth."

The Vice President of Shell Bitumen, Egbert Veldman, said: "The bitumen business in China has shown strong growth in the last decade and the acquisition of KMC represents a step change in the scale of Shell's bitumen business, improving market coverage and allowing us to offer quality road surface products across China."

The deal was signed on 28 February and Shell expects to take control of the KMC business in the second quarter of 2006 subject to regulatory approval.