German chemicals giant Lanxess AG (LXS.XE) on Monday broke ground on a EUR400 million ($686 million) plant in Singapore as it moves to meet rising demand for tires in China and India.

The company said it will channel at least 10% of the investment towards “modern technologies engineered to protect the environment” through a cleaner and more energy-efficient manufacturing process.

“In terms of volume, this investment is the largest in our five-year history,” Axel C. Heitmann, chief executive officer of Lanxess, said in a statement. “It underlines our commitment to synthetic rubber as well as our customers and to the future growth markets in Asia.”

The plant will start producing butyl rubber, a chemical used to make tires, in the first quarter of 2013, the company said in a statement.

Located in Jurong island, a petrochemicals base that has attracted billions of dollars in foreign investment, the 100,000 ton per annum Singapore plant will become the hub of Lanxess’ Asian operations.

The company said the factory will enable it to meet rising demand for butyl rubber in China and India where rapidly expanding middle classes are buying more cars.

Butyl rubber is also a key product in the pharmaceuticals industry, primarily in Asia, Lanxess said.

It said the firm’s butyl rubber plants in Belgium and Canada are already producing at full capacity.

Lanxess’ customers include global tire brands Bridgestone, Michelin, Hankook and Yokohama.