In the same week the country's largest agricultural and chemical company, Agrofert Holding, announced plans to begin production operations in China, it also continued in its legal battle with Unipetrol's owner, PKN Orlen.

On May 25, Agrofert filed a third arbitration claim worth Kè 409 million (€ 14.5 million) against PKN in connection to the Polish company's refusal to hand over bad debts it received as part of the privatization of Unipetrol one year ago.

This is related to two previous claims filed, the first in December last year, which demanded compensation upward of € 300 million over PKN's current management's refusal to sell to Agrofert stakes in five Unipetrol companies: Agrobohemie, Alicahem (now Synthesia), Kauèuk (which is currently being sold in tender), Paramo and Chemopetrol.

Agrofert had signed a contract in 2004 with PKN's previous management for the sale of these stakes reportedly in return for help in the privatization of Unipetrol. However, the new management of PKN reneged on the contract, saying the combined sale price of Kè 3.1 billion was below market value.

In other news, Agrofert is the latest Czech company looking to capitalize on the increasingly important Chinese market and economy. The firm announced May 25 that it had acquired a titanium dioxide production facility with an annual output of 15,000 tons. Within two years, the firm plans to increase capacity to 40,000 tons.

This is Agrofert's first large investment in the Asian country, although it's operated a trading office in Beijing for 15 years. “We will test the environment with this acquisition,” Kadaník said.

Agrofert is also looking at other acquisitions in China, including in titanium dioxide and in the rubber chemical industry, Kadaník said. Nothing is planned in the short-term, he added, as the group wants to concentrate on the current project.

That project will be fitted with technology from one of the group's companies, Precheza, which has a 40-year history in titanium dioxide production in the Czech Republic. In 2007 and 2008, the firm plans to work on increasing capacity and improving quality at the plant, located next to the Yangtze River in the Chinese province of Anhui, 350 kilometers from Shanghai.

Titanium dioxide has an annual world production of 4 million tons and is used as a white pigment in paints, plastics, papers, inks and even toothpaste. It can also be used as a thickener in cosmetics and skin care products.

China has captured the attention of the some of the largest Czech companies in the past two years. In December 2004, financial group PPF opened a representative office in China and wants to expand its insurance, banking and consumer financing businesses on the market.

Still, he said, the market provides many opportunities, especially in machinery production and exports, as well as supplying auto parts for China's growing automotive industry.

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