American-based Huntsman Chemical's Icon 2 plant in Greatham, near Hartlepool, will secure 500 jobs.

It is seen as proof that Teesside's petrochemical industry can be sustained after years of decline.

The plant will produce pigments, commonly used in paint and teeth whitener.

A spokesman for the company said: "This marks the first major investment in new plant by Huntsman in the UK since it acquired four key businesses from ICI for £1.7bn in 1999.

"The new plant will increase overall titanium dioxide capacity at Greatham to 100,000-tonnes a year and will help secure the long-term future of about 500 people.

"This expansion will help ensure the viability of the site at Greatham and is a fine example of our strong commitment to Teesside, which is of vital importance to Huntsman and its ambitious plans for the future."