CHEMICALS giant Huntsman has announced plans to build a new £200m plant at Wilton, creating 117 jobs and safeguarding a further 747.

The Department of Trade and Industry has granted the firm £16.5m towards the project, which will also see Huntsman's existing two plants on Teesside upgraded.

The new facility will be the largest of its kind in the world, producing 400,000 tonnes of low-density polyethylene (LDPE) a year. The substance is used in packaging.

A spokesman for Huntsman said construction work was expected to start early next year and the plant should be completed and operational by September, 2007.

The company's president and chief executive officer, Peter R Huntsman, said: "Teesside is one of the most important of our global locations and we are delighted that we will now enhance our presence here with this large, world-class facility.

"It is good news for Huntsman, for the economy of the North-East and for the UK as a whole.

"We have worked hard to make it a reality and the faith and confidence of the UK Government has been very important to the process."

Trade and Industry Secretary Patricia Hewitt announced the Government grant on Tuesday, saying: "This is great news for Teesside and shows that we are committed to high-value manufacturing. The investment will help the cluster to maintain its position as a globally competitive petrochemicals site.

"The jobs will create opportunities not just for those employed at the plant, but for the rest of the area, too.

"Huntsman's decision to make this investment demonstrates Teesside's attractiveness as a high-value manufacturing location. It also shows that the UK remains the best place for investors to base their businesses in Europe."

Alistair Arkley, chairman of the Tees Valley Partnership, said the announcement was a major step forward in securing the long-term future of Teesside as a world class chemicals centre and could prove a watershed in gaining Government backing for other projects.

"It is a major commitment to the Tees Valley by an international company which, as well as creating new jobs, will help secure many more," he said.

"Our chemicals sector has undergone tremendous change over recent years, especially with the much wider pattern of ownership than we had in the past. However, I know that, since their arrival here, Huntsman has been greatly impressed both by the quality of our local workforce and the very positive approach we have taken to the continuing success of our chemicals operations."

Huntsman manufactures products for a variety of global industries such as plastics, automotive, footwear, agriculture, health care, textiles and packaging.

Based in the United States, the company employs 15,000 people world-wide and has operations in 30 countries.