This week's world news

05 October 2009 00:00  [Source: ICB]

SOLVAY SELLS PHARMA UNIT FOR €5.2BN
Belgian chemical group Solvay has sold its pharmaceutical business to US company Abbott Laboratories for an enterprise value of €5.2bn ($7.6bn). The enterprise value includes €4.5bn in cash, additional potential payments of up to €300m if certain milestones are reached and liabilities of €400m. The transaction is expected to be closed in the first quarter of 2010, pending approval by relevant competition authorities. Solvay said once the deal was closed, the company would reinvest in "value-added activities and strategic projects in chemicals and plastics." Solvay's CEO, Christian Jourquin, said: "We are building a new refocused group with the financial means to further accelerate sustainable growth on today's strong foundations."

DYSTAR FILES FOR INSOLVENCY IN GERMANY
International textile chemicals producer DyStar has filed for insolvency with a court in Germany. DyStar is one of the world's largest textile chemical producers. The court at DyStar's headquarters in Frankfurt has appointed temporary insolvency administrators and all transactions affecting DyStar's assets are subject to approval by these administrators. DyStar is owned by US equity firm Platinum. The insolvency filing comes after reports in the German press last week that the company may be broken up and sold amid tough market conditions in the textile chemical industry.

BASF PLANS TO DOUBLE SALES IN ASIA-PACIFIC
Germany's BASF plans to invest €2bn ($2.9bn) in the Asia-Pacific region in 2009-2013 as it continues to aim to generate 70% of regional sales from local production. BASF said it wanted to grow on average 2% above the expected 4-5% average annual growth rate from the current €650bn Asia-Pacific chemical market. This would double sales in the region - which last year reached €9.3bn - by 2020. "The current economic situation does not change our positive expectations of the long-tem potential of these dynamic markets," said BASF board member for Asia-Pacific, Martin Brudermuller.

US CHEMICAL GROUPS WELCOME REFORM GOALS
US chemical industry officials have welcomed steps being taken by federal environmental regulators to modernize the nation's principal law governing control of chemicals in commerce. The American Chemistry Council said that general principles for reform of the 33-year-old Toxic Substances Control Act outlined by the Environmental Protection Agency (EPA) "are closely aligned with principles that we have advanced." Council president Cal Dooley said he was pleased to learn "that the EPA principles are in most respects very closely aligned with principles that we put forward in August."

US ENERGY GROUPS SLAM CLIMATE BILL
Energy sector officials and Republican leaders have raised objections to a major new climate change bill to be introduced in the US Senate, saying it leaves key issues unresolved and disfavors industry. Advance criticism of the long-awaited Senate climate change bill came as leaked copies of the 800-page draft legislation circulated in Washington. American Petroleum Institute (API) officials said the draft bill "leaves unaddressed key elements of how it intends to constrain carbon emissions."

THAI COURT HALTS 76 PROJECTS IN RAYONG
Thailand's Central Administrative Court has ordered a temporary halt to the construction of 76 projects in Rayong province, including the polyolefins project of conglomerate Siam Cement group and those of the country's oil and gas giant PTT, on environmental grounds. Mab Ta Phut, the petrochemical hub of the country, is in Rayong province. "SCG Chemicals is in the process of completing the construction of its upstream naphtha cracker, related downstream subsidiaries and joint-venture operations," the company's parent, Siam Cement, said. The projects were originally supposed to start up from late this year to the middle of 2011.

BIDDERS DISAPPOINT FOR POLAND CHEMS
There is widespread disappointment at the lack of a "big-name" investor on the short list of bidders for the flagship package of companies in Poland's chemical industry privatization, an industry source said last week. "When you look at this list, you have four financial investors and two mid-sized chemical groups that are not likely to bring many new technologies if they win, so you cannot say the privatization offer looks like a success at this stage," said a source at the Polish Chemical Consortium. PKCh, which was formed to represent the interests of the flagship package, comprises three companies - Ciech, Zaklady Azotowe Tarnow and Zaklady Azotowe Kedzierzyn.

KBR WINS CONTRACT FOR SAUDI ARAMCO PROJECT
US petrochemical engineering firm KBR has won a contract for Saudi Aramco's planned natural gas liquids (NGL) project in Shaybah, Saudi Arabia. The contract award includes front-end engineering and design work, as well as project management services. Work will begin in October. "This award, along with our existing work at Ras Tanura and Yanbu, signifies our continued commitment to support Saudi Aramco development programs," said KBR downstream president John Quinn.

JACOBS WINS BOROUGE POLYMER PLANT WORK
Plastics major Borouge has awarded part of the front-end engineering and design (FEED) work for its Borouge 3 grassroots polypropylene (PP)/polyethylene (PE) plant in Abu Dhabi to Jacobs Engineering Group, of the US. Jacobs' section will involve the compounding, soaking, and product handling line for the project. The FEED work is due to be completed in mid-2010. Financial terms or capacity details were not disclosed. According to reports from earlier this year, Borouge 3 would, once completed at the end of 2013, boost the company's polyolefins production capacity to 4.5m tonnes/year.

BORSODCHEM DELAYS RESTRUCTURE PLANS
The restructuring of Hungarian isocyanates producer BorsodChem is being delayed by the failure of China's Yantai Wanhua to reveal its intentions toward the company, BorsodChem's CEO said last week. Calling on the Chinese methyl di-p-phenylene isocyanate (MDI) producer to reveal its plans, Wolfgang Buchele said it was "high time that it publicly announce its intentions and show its commitments to the other parties on the matter of an approved restructuring of [BorsodChem's] debt." The company said that its new restructuring plan, as well as the company's investment program, could not be implemented until Yantai Wanhua gives its assent.

UKRAINE HOLDS ODESSA AUCTION, REJECTS BID
Ukraine's authorities have rejected the result of a controversial auction of a controlling stake in ammonia producer Odessa Port Plant. The state-owned 99.567% stake was auctioned at an initial price of hryvnya (HRN) 4bn ($471m). Ukraine's Nortima placed the winning HRN5bn bid, but Ukraine's State Property Fund (SPF) announced that the auction commission unanimously voted against the approval of the result. After the auction, SPF head Dmitry Parfenenko, described the auction's result as "inadequate" and said that the stake was worth HRN8bn-9bn. Prime Minister Yulia Tymoshenko said: "It became evident on live television how the three participants in the auction conspired to buy the Odessa Port Plant for a song."

EVONIK TO SELL ALZCHEM TO BUY-OUT FIRM BLUO
Germany-based chemical company Evonik Degussa is set to sell specialty chemical unit AlzChem to compatriot buy-out group Bluo, Evonik says. Differences between AlzChem and Evonik's core businesses were cited as the reason for the sale. Before a sale is finalized, Germany's cartel office and Evonik's board must accept the purchase conditions. A time-frame for the deal has not yet been agreed. Evonik recently denied a report that it was planning to sell its power production and real estate divisions to focus on its specialty chemical business.

DOW TO SET UP R&D CENTER IN SAUDI ARABIA
US-based Dow Chemical plans to set up a research and development (R&D) center at Saudi Arabia's King Abdullah University of Science and Technology (KAUST). The center will initially focus on water and water treatment technologies after becoming operational in late 2010. Later, the Dow Middle East R&D Center at KAUST will expand its work to include oil and gas, processes research and development, and infrastructure materials. The move comes on the back of Dow's investments in Saudi Arabia and other high-growth economies. Dow's investment plans in Saudi Arabia include an 8m tonne/year petrochemicals joint venture with state oil company Saudi Aramco, described as the world's largest grassroots plastics and chemicals production complex to be developed at one time.

US EPA PLANS TO REGULATE FACTORIES' EMISSIONS
The US Environmental Protection Agency says it will seek to regulate greenhouse gas emissions by power plants and manufacturing facilities, but industry officials immediately challenged the agency's action. The agency said under the Clean Air Act it would soon propose rules requiring permits for large industrial facilities that emit 25,000 tonnes or more of gases.

W.R. GRACE COMPLETES $27M IN DIVESTMENTS
W.R. Grace has completed the sale of two product lines for about $27m (€19m), the US catalyst producer said last week. According to Grace, it sold the two product lines in separate transactions. The company added that it expected to report a pre-tax gain of about $22m in its third quarter. The company said it sold its membranes product line to a strategic buyer for about $22m. The membranes product line makes and sells polymer-based membranes used in natural gas separation.

PERU AMMONIA PROJECT STALLS ON FEEDSTOCKS
PetroPeru and Brazilian state oil company Petrobras have postponed plans to build an ammonia project because of a lack of feedstock, a former president of the Peruvian national oil company has said. "The urea-ammonia project that PetroPeru-Petrobras were working on has been stopped," Cesar Gutierrez said. "Currently, the availability of gas is much more complicated, as daily production has been insufficient to meet all the requirements that have been presented." Early last year, the two companies announced plans to build a $1bn (€690bn), 750,000 tonne/year ammonia plant that would have mainly produced chemicals for the country's mining sector.

VOPAK AND GASUNIE EYE DUTCH CO2 STORAGE HUB
Petrochemicals storage company Vopak has teamed up with gas infrastructure firm Gasunie to examine the feasibility of a distribution hub for the handling and temporary storage of carbon dioxide (CO2) in the Netherlands. If realized, the Dutch companies could develop a distribution hub that would receive CO2, which would then be transported by vessel or pipeline to depleted offshore gas fields.

NOVAPEX REVEALS START DATE FOR NEW PLANT
French phenol and acetone producer Novapex says it will start production at its new 40,000 tonne/year isopropanol (IPA) unit located in Roussillon, southern France, on January 1, 2010. The company said the expansion is fully integrated upstream, using Novapex's own high-purity acetone as its feedstock, local contractor ERAS and Japanese industrial group Mitsui licensed technology to produce high-quality IPA. It will be available in three grades to meet technical, cosmetic and pharmaceutical market requirements.

TRELLEBORG OPENS PLANT IN CHINA
Trelleborg has opened a new plant in China to make products for infrastructure projects, the Sweden-based international polymer technology company says. The plant, in Qingdao, on China's east coast, will make products such as fender systems for harbors and dredging hoses, initially employing a staff of 100. Qingdao is a main hub for rubber manufacturing in China, bringing Trelleborg's plant close to the delivery chain and facilitating recruitment.

POLAND'S CIECH EARNS €60M FROM SALE OF SALT
Polish chemical producer Ciech has earned €60m ($87m) from the sale of four salt caverns to German energy group RWE. The company said the capital would be used to address its zlotych 1.7bn ($585m, €402m) debt, on which the company breached banking covenants after the onset of the economic downturn. The caverns are at the site of Ciech's German subsidiary, Sodawerk Stassfurt, in Stassfurt, Northeast Germany. RWE intends to use them for natural gas storage, Ciech added. Ciech's purchase of Sodawerk Stassfurt enabled it to become Europe's second-largest soda ash company.

RHINE WATER LEVELS CAUSE DISRUPTION
Water levels on the Rhine River continue to drop, creating serious logistical problems for petrochemical firms that use the waterway to access the Port of Rotterdam and the North Sea, producers, traders and hydrologists say. Barges have been travelling with loads as low as 30% of capacity on some sections of the river, causing congestion as more barges are needed. Chemical firms have also been scrambling to secure railcars. "It is getting difficult to find barges and railcars," one major German petrochemical producer said.

US PETCHEMS WORK TO STALL CLIMATE BILLS
The energy industry hopes to defeat cap-and-trade and carbon emissions legislation by stalling the bills until after the 2010 US mid-term elections, a trade organization official said last week. "I am holding on for dear life for those elections," National Petrochemical & Refiners Association Executive Vice President Greg Scott said at a methanol forum in Houston. "The clock is our friend," he added. "If polling numbers hold, Democrats will lose seats in both the House and the Senate."

FORMOSA TO SPEND $10M IN UPGRADES IN DISPUTE
US group Formosa Plastics agreed to spend more than $10m (€6.9m) in upgrades to improve leak detection and repair programs at two US plants to address environmental violations. It will pay a $2.8m civil penalty to resolve US environmental violations.

EU REDUCES FINE ON HOECHST FOR CARTEL
The European Commission must reimburse former German chemicals major Hoechst 10% of the fine that it was ordered to pay for its part in a cartel in the monochloroacetic acid (MCAA) market, the European Court of First Instance ruled last week. The court said the Commission must reduce the fine to €66.63m ($97.98m) because it "failed to take into account under its Leniency Notice that Hoechst did not dispute the facts." However, the judges upheld similar fines against Dutch chemical group AkzoNobel, as well as energy group Elf Aquitaine and chemical major Arkema, both French. The Commission imposed the fines in 2005 for anti-competitive behavior in the MCAA market.

WACKER CHEMIE EXITS SOLAR WAFERS; Q3 HIT
Wacker Chemie's exit from the solar wafer business is to shave €50m ($72.4m) from its third-quarter pretax profits and raise its debts by about €65m, the German photovoltaic materials and specialty chemical firm has said. The company has agreed to transfer all of its shares in the joint venture (JV) Wacker Schott Solar to its partner Schott Solar. The number of shares to be transferred to Schott Solar was not disclosed. Wacker Chemie said it intended to focus on production of hyperpure polycrystalline silicon.

US NEEDS E15 TO ATTRACT INVESTORS TO CELLULOSIC
The US must raise its ethanol blend level in gasoline to 15% (E15) to draw more investors to second-generation cellulosic ethanol, an industry group said. The US now limits ethanol blending in gasoline at 10%, but the industry argues the restriction - also known as the blend wall - needs to be relaxed to secure a market for the biofuel in the coming years. "You cannot attract investment [to cellulosic] if you cannot guarantee there will be a market for it," said Chris Thorne, a spokesman for ethanol group Growth Energy. The US plans to begin blending cellulosic ethanol in gasoline in 2010, mixing 100m gal (455m liters) of the product in its gasoline supply. That level will jump to 250m gal in 2011 and 16bn gal/year by 2022.

DOW, EPA LIKELY TO REACH ACCORD ON DIOXINS
The US Environmental Protection Agency (EPA) and US major Dow Chemical expect to sign an agreement soon regarding the ongoing clean-up surrounding the company's plant complex in Midland, Michigan, US. The agreement will include an administrative order on consent to comprehensively address dioxin and other Dow contamination along the Tittabawassee river and Saginaw river and bay in Michigan, the EPA said.

AFRICAN BIOFUELS MARKET LIKELY TO GROW RAPIDLY
Biofuels projects in sub-Saharan Africa should experience rapid growth as a result of the EU and US setting higher biofuel quotas for their fuel supply, according to a report issued from global research and consulting firm Frost & Sullivan. The African market's annual biofuels revenues - ­projected at $26.9m (€18.3m) in 2009 - should jump to $229.9m by 2017. Available land and suitable climate make the region ideal for feedstock production, the firm said. "Globally, growing awareness of environmental issues and finite energy sources has led to heightened investment into alternative and renewable energy," said research analyst Kholofelo Maele.


By: Will Beacham
+44 20 8652 3214



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