Saudi Basic Industries Corporation (Sabic), the world's largest chemical maker, and Mitsubishi Rayon Co have decided to establish a joint venture making materials used for cars in a bid to compete with US and European rivals, including BASF AG.

The $1 billion (Dh3.67 billion) venture will construct a plant to make 250,000 tonnes a year of methyl methacrylate, with operations commencing in fiscal 2013 in Saudi Arabia.

The sources said that the conglomerates will also create 30,000 tonnes of polymethyl methacrylate.

The company, 70% held by the Saudi Government, has expanded into specialty chemicals as the petrochemical maker benefits from abundant raw materials, such as natural gas, and rising Asian demand for plastics, solvents and polymers.

According to sources, Sabic added a network of factories making resins and thermoplastic sheets used in cars, roofs and lighting when it bought General Electric Co's plastics unit in 2007 for $11.6 billion.

As per reports in media, Sabic envisages to boost petrochemical production by 12 million tonnes over the coming two fiscals by expanding foreign ventures and domestic plants.