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Chinese tyre manufacturer Linglong said it planned to invest US$645m (EUR590.7m) to expand its production of tyres in Serbia’s northern city of Zrenjanin to meet rising demand in Europe.

Linglong aimed to increase annual production by 1.1m sets of various high performance radial tyres, the company said in a filing with the Shanghai bourse cited by SeeNews.com.

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Linglong broke ground on its Serbian plant in April 2019. Serbia’s government said at the time the company would invest EUR800m in the construction of the factory, which was planned to create 1,200 jobs and produce 13m tyres per year.

The expansion project, which envisages construction works on 87,903 square metres, will also include the construction of a photovoltaic power plant with an installed capacity of 24 MW, the company added, according to SeeNews.com.

Linglong said it would invest about $192.8m of its own funds in the expansion, with the remainder coming from bank loans.

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Construction was expected to start in January 2025 with completion planned by the end of 2030.

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The report said the expansion would generate an average annual operating income of $281.8m and an average annual net profit of $122.8m with investment payback period of 5.79 years, including construction time.

Production of truck tyres at the Zrenjanin factory started in 2023, followed by the production of passenger car tyres in early 2024.

Along with the plant in Serbia, Linglong has a production facility in Thailand and five production sites in China, SeeNews.com noted.

The report added that Linglong operates in Serbia through subsidiary Linglong International Europe which, in 2023, booked a net profit of 1.4bn dinars ($13.1m/EUR12m), according to its annual financial statement.