By: Robin Pagnamenta

June 23, 2008 — Oil prices reaching nearly $140 a barrel are transforming the economics of the global plastics industry as producers start to pour billions of dollars into plant-based alternatives.

Already considered a growth sector because of increased consumer concerns about the environment, some of the world's largest chemical companies, including DuPont, Dow Chemical, Cargill and Braskem, are now accelerating their production of bio-plastics made from crops including sugarcane, corn and maize.

Dow, the world's largest producer of conventional plastics, is investing $500 million (£253 million) in a new factory in Brazil that will produce polyethylene, one of the most commonly used forms of plastic, from ethanol made from sugarcane. It is due to open in 2011 and will employ about 3,000 people, producing 350,000 tonnes of the material a year.

Meanwhile, Braskem, the Brazilian chemicals group, has embarked on a similar venture, aiming to produce 200,000 tonnes of polyethylene a year.

Other ventures are under way in the US, where NatureWorks, a subsidiary of Cargill, the American agribusiness group, has opened a factory in Blair, Nebraska, producing 140,000 tonnes of a different kind of biodegradable plastic known as PLA, which uses corn starch.

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