Johnson Matthey has signed a preliminary agreement with the Macedonian authorities with a view to opening a catalyst manufacturing operation in the country in 2009.

The Memorandum of Understanding between the two parties moves the factory's construction a step closer.

Macedonia is now considered the favourite among Eastern European countries that are being considered by Johnson Matthey for expansion, with Hungary, Croatia, Poland, Czech Republic and Slovakia also mooted as possible locations for factories.

The project, which will be located in the Bunardzik free zone, will be overseen by Colin Jaffray of Johnson Matthey and is expected to bring hundreds of jobs to the local area.

Mr Jaffray said that a series of favourable conditions such as tax breaks, a skilled workforce and the professionalism of the Macedonian government had been driving factors in the decision to choose Macedonia.

Macedonian Prime Minister Nikola Gruevski said: "The ability of Macedonia to attract companies such as Johnson Matthey is an endorsement to the incentives, the attractive cost base and our strategic location. I fully expect other companies to follow, we look forward to an exciting period and programme of sustained investment."

It is expected that a further contract will be signed to commit both parties to the venture in a few months' time.

Ÿ Adfero Ltd