Business Concentrates

Europe moves on propylene pipeline

SABIC Pipelines, which already operates the Northern European ethylene pipeline grid, will manage a new propylene pipeline in association with Infracor, a chemical sites management company owned by Degussa. Like the existing ethylene pipeline, the new propylene pipeline will link Rotterdam, the Netherlands, and Antwerp, Belgium, with industrial areas in Belgium, the Netherlands, and Germany. The European Commission last year approved roughly $32 million in subsidies from the German, Dutch, and Belgian governments toward the total pipeline cost of more than $200 million as part of an upgrading of the region's energy infrastructure. Industry representatives are confident that the pipeline project will go ahead, despite a current review of the subsidy by the newly installed EC. "There is precedent for approval as part of the EU's infrastructure plans," says a spokeswoman for the Association of Petrochemical Producers in Europe. Rudi Demeuse, managing director of the European Pipeline Development Co., the chemical company consortium planning the pipeline, adds that the existing ethylene pipeline "has given a tremendous boost to the growth of the chemical industry along its entire route. The new propylene network is likely to have the same effect."

Lanxess to close plants

Lanxess is restructuring its fine chemicals and styrenic resins businesses. The company has begun talks with employee representatives regarding closure of unprofitable fine chemicals production units in Leverkusen, Germany, and styrenic resins plants in Tarragona, Spain, and Dormagen, Germany. "The economic situation of both these business units is unsatisfactory," the company says, adding that the intention is to improve international competitiveness. Closure of the plants, and other possible realignments, will save nearly $130 million annually, Lanxess predicts.

Erco to buy KOH facility

Erco Worldwide, a unit of the Superior Plus Income Fund that was formerly known as Sterling Pulp Chemicals, has agreed to purchase a Port Edwards, Wis., facility from Occidental Chemical for $29.5 million. The deal will follow OxyChem's purchase of Vulcan Materials' chlor-alkali business, expected to be complete in the second quarter. According to Superior, some 70% of the facility's gross profits come from potassium hydroxide; it also makes potassium carbonate, caustic soda, chlorine, and hydrochloric acid. OxyChem is being forced to sell off some KOH assets because the purchase would otherwise consolidate two of the largest KOH businesses in the U.S. Erco says the business will complement its chlor-alkali operations in Saskatoon, Saskatchewan.

Bakelite buy gets EC okay, with conditions

The European Commission has approved the acquisition of German chemical company Bakelite by the private-equity investment firm Apollo Management, subject to conditions. Apollo already owns Borden Chemical, which makes phenolic resins, and Resolution Performance Products, which produces reactive diluents for epoxy resins. The EC found that the acquisition "could give rise to competition concerns" in those two fields, as Bakelite is a producer of phenolic and epoxy resins. The approval calls for Borden and Bakelite to license a "technology package" to their customers, who could then sublicense it to an alternative supplier. In the field of epoxy resins, the concerns involve monofunctional aliphatic glycidyl ester diluents. Resolution and Bakelite will enter long-term agreements with certain customers of the diluents so they can secure supply and pricing conditions.

GE moves in silicon field

GE Advanced Materials has expanded capacity in Texas City, Texas, for a silane used in the production of silica-based tires. GE says its NXT silane is a patented molecule that helps circumvent the multistep process required when traditional silanes are employed to mix silica with rubber for silica tires. Separately, GE has introduced a silicone called Silbreak for crude oil demulsification. The company says Silbreak may allow the oil industry to exploit sources of crude oil that are now economically unattractive.

Novartis inks respiratory pact

Novartis has signed a development and commercialization agreement with Vectura Group and Arakis for AD 237, an inhaled antimuscarinic agent for the treatment of chronic obstructive pulmonary disease. Under the agreement, Vectura and Arakis will each receive an initial payment of $15 million. Additional milestone payments could bring the total amount paid by Novartis to $375 million, according to Arakis and Vectura. The three firms will develop AD 237 as a monotherapy and in combination with QAB 149, Novartis' once-daily beta2 agonist currently in Phase II clinical development.

Octel CEO resigns

Octel says its CEO, Dennis J. Kerrison, has resigned from the firm "by mutual agreement." In violation of the firm's code of ethics, Kerrison arranged to transfer $95,000 from his bank account in Britain to the company's account in South Africa. Kerrison then received a payment of the same amount from the South African unit for his own use. Paul Jennings, Octel's chief financial officer, will take on the CEO's duties until a successor is named.

Unions press DuPont on PFOA

A coalition of unions and other groups known as DuPont Shareholders for Fair Value is pressing a stockholder proposal at DuPont's annual meeting that would force the firm to disclose legal fees and "other hidden costs" associated with perfluorooctanoic acid, a surfactant used to manufacture fluoropolymers. The coalition contends expenses linked to PFOA could have an impact on DuPont stock. DuPont is urging shareholders to vote against the proposal. It says it has already gone beyond regulatory requirements in revealing costs and scientific data relating to PFOA.

Neville settles release dispute

Neville Chemical has reached a settlement with the Pennsylvania Department of Environmental Protection over a 2001 release of oil into the Ohio River. Instead of paying the $17 million fine sought by PDEP, Neville will spend $2 million for equipment and new process designs that will improve the plant's wastewater collection and treatment system.

Solutia plans China PVB plant

Solutia has begun the design and engineering of a new Saflex polyvinyl butyral interlayer plant for China. Although the company has not named a site, it says the plant will be located in an industrial community such as those found in the Shanghai area. Solutia says the plant is being designed to meet growing demand from the Chinese automotive industry for PVB interlayers used in windshields.

Exports up, but imports up more

U.S. exports and imports of chemicals increased in February from the previous month, but imports rose almost twice as much as exports, increasing the chemical trade deficit. According to Commerce Department data, the value of chemical exports in February totaled $9.77 billion, a 4.3% rise from January. Meanwhile, imports increased 7.9% to $10.4 billion. The result was a deepening of the chemical trade deficit to $602.5 million from $240.8 million in January. The deficit in February of last year was $804.7 million.

DSM to divest yeast business

DSM has agreed to sell its bakery ingredients business to Gilde, a European private-equity investor, for about $250 million. The business, which had sales last year of about $450 million, is considered the world's number three maker of yeast and bread improvers. DSM Chairman Peter Elverding signaled his intent to sell the business at the company's annual meeting earlier this year. The company will remain active in other food ingredient businesses.

Toray to spend on carbon fiber

Toray Industries will add two carbon fiber lines with combined annual capacity of 2,200 metric tons to its plant in Ehime, Japan. The lines are scheduled to open in January 2007 at a cost of $235 million. Toray is also building a plant at the site to make prepreg--carbon fiber sheets impregnated with epoxy resin. The company expects that world demand for carbon fiber will be 30,000 metric tons in 2007, by which time its capacity will have reached 13,100 metric tons. Toray began expanding its facilities in Alabama last year after bagging a major contract to supply Boeing's new 787 aircraft.

Reichhold buys Brazilian unit

Reichhold has purchased the unsaturated polyester resins business Industria Brasileira de Resinas (IBR). Reichhold isn't disclosing the terms of the deal but says the acquisition will increase its Brazilian composites business by 20%. IBR has a plant in Simoes Filho, Bahia, Brazil, near the petrochemical complex in Camaçari. Reichhold operates a plant in Mogi das Cruzes, São Paulo, that it obtained through its 1996 purchase of Resana.

More bromine for Israel

Israel's ICL Industrial Products will add some 40,000 metric tons per year to its bromine capacity next year through process improvements at its site next to the Dead Sea. The company currently has capacity for about 250,000 metric tons and supplies roughly 35% of the world's demand for bromine. ICL says the capacity increase "is one of the largest added to the global bromine industry in recent years." The boost follows continued depletion of bromine-producing brines in the U.S. and China, and the closure of a bromine plant in Europe, the company adds.

BUSINESS ROUNDUP

Diversa has signed an agreement with Cargill's health and food technologies unit under which it will discover and develop enzymes to be used in the production of a Cargill product. Diversa will receive up-front payments and may get milestone and royalty payments.

Paper, Allied-Industrial, Chemical & Energy Workers International Union (PACE) members voted last week to merge with the United Steelworkers of America. The combined union will have more than 850,000 active members.

Syngenta is collaborating with the biopharmaceutical firm Pieris Proteolab to develop a drug based on Pieris' Anticalins technology. Syngenta, an agribusiness firm, has a nascent biopharmaceutical effort.

Greenkote, an "environmentally friendly" coatings company, plans to raise some $3.7 million with a stock offering on London's Alternative Investments Market. Among the firm's intended uses of the funds is construction of its first plant outside Israel.

GlycoFi has formed a research collaboration with Centocor under which it will determine the feasibility of producing a Centocor therapeutic protein using its yeast-based production technology.

Eastman Chemical and the Erora Group are studying the feasibility of coproducing chemicals at a coal gasification facility that Erora is planning near Taylorville, Ill. Eastman makes chemicals from coal gasification in Kingsport, Tenn.