JV to Supply Comonomers for Dow’s High Value Performance Plastics Franchise
MIDLAND, Mich. - March 18, 2013
The Dow Chemical Company (NYSE: DOW) announced today an initial agreement for a long-term ethylene off-take agreement with a new joint venture to be formed between Idemitsu Kosan Co., Ltd., and Mitsui & Co., Ltd., of Tokyo, Japan. Idemitsu and Mitsui will form the joint venture to construct and operate a world-scale, Linear Alpha Olefins unit on the U.S. Gulf Coast. This agreement marks the next milestone in Dow’s strategy to integrate cost-advantaged feedstocks to support the profitable growth of the Company’s high value Performance Plastics franchise. The joint venture will utilize an integrated supply of ethylene from Dow’s production grid on the U.S. Gulf Coast to produce Linear Alpha Olefins used as comonomers throughout Dow’s high value Performance Plastics franchise, and will contribute significant capital for these rights.
“Today’s announcement further illustrates Dow’s commitment to invest in high-return projects that deliver advantaged feedstocks for our differentiated, downstream derivatives, while simultaneously building strategic partnerships that drive economies of scale and improved capital efficiency,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “Taken on the whole, positive disruptive trends in U.S. shale gas have led us to make different decisions about where and how we invest for global growth. Our comprehensive U.S. Gulf Coast investments will enable our enterprise to deliver higher and more sustainable value from our existing premier U.S. base to supply domestic and global growth.”
Dow is a large consumer of Linear Alpha Olefins and utilizes them within the Company’s Performance Plastics franchise for the production of high performance materials such as DOWLEX™, ELITE™, NORDEL™, AFFINITY™ and ENGAGE™. Dow expects the agreement with the JV will enable a long-term supply and purchase relationship for Linear Alpha Olefins, which will enhance Dow’s high value Performance Plastics franchise, better enabling it to serve several of the Company’s fastest growing market segments, including Packaging; Hygiene and Medical; Electrical and Telecommunications; Transportation, Sports and Leisure and Consumer Durables.
“This agreement highlights Dow’s commitment to further strengthen the competiveness of our high-value, performance-oriented Plastics businesses, as well as our aim to grow with our customers in North and South America,” said JJames (Jim) R. Fitterling, Dow executive vice president. “The agreement with the joint venture is beneficial to the project economics and is a good example of the type of strategic projects that Dow is currently evaluating: As an investor in Dow’s Gulf Coast project, Idemitsu and Mitsui will receive ethylene integration benefits while improving the capital efficiency of the cracker from a Dow perspective. In addition, Dow secures a reliable, integrated, cost-advantaged source of comonomers for our Performance Plastics franchise.”
Location options for the Linear Alpha Olefins unit are currently being explored with final investment locations to be determined at a later date. Construction and start-up of the new unit is targeted for 2016.
The JV is in the Front End Engineering and Design (FEED) phase and will complete this work in 2014. Financial details are not being disclosed.
Dow (NYSE: DOW) combines the power of science and technology to passionately innovate what is essential to human progress. The Company connects chemistry and innovation with the principles of sustainability to help address many of the world's most challenging problems such as the need for clean water, renewable energy generation and conservation, and increasing agricultural productivity. Dow's diversified industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 160 countries and in high growth sectors such as electronics, water, energy, coatings and agriculture. In 2012, Dow had annual sales of approximately $57 billion and employed approximately 54,000 people worldwide. The Company's more than 5,000 products are manufactured at 188 sites in 36 countries across the globe. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted. More information about Dow can be found at www.dow.com.
Mitsui & Co., Ltd is one of the most diversified and comprehensive trading, investment and service enterprises in the world, with 151 offices in 67 countries as of March, 2013. Utilizing the global operating locations, network and information resources, Mitsui is multilaterally pursuing business that ranges from product sales, worldwide logistics and financing, through to the development of major international infrastructure and other projects in the following fields: Iron & Steel Products, Mineral & Metal Resources, Infrastructure Projects, Motor Vehicles & Construction Machinery, Marine & Aerospace, Chemicals, Energy, Food Resources, Food Products & Services, Consumer Services, IT, Financial & New Business and Transportation Logistics. Mitsui is actively taking on challenges for global business innovation around the world. More information about Mitsui can be found at www.mitsui.com.
Idemitsu Kosan Co., Ltd. is one of the Japan’s largest petroleum and chemical company. Since its establishment in 1911, Idemitsu has been practicing the concept of ‘respect for human beings’ in the conduct of business and contributing to society through business. Under this philosophy, Idemitsu puts all its efforts not only to ensure stable energy supply in Japan, but also to contribute to the expanding overseas market in the various fields such as oil exploration and production, coal mining, petrochemical, lubricants and electronic materials. Idemitsu has 4 refineries and 2 petrochemical plants in Japan and annual sales for FY 2011 was JPY 4.3 trillion. More information about Idemitsu can be found at www.idemitsu.com.
Note: The forward-looking statements contained in this document involve risks and uncertainties that may affect the Company’s operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Company’s expectations will be realized. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.
For editorial information:
The Dow Chemical Company
Nancy Lamb, 989-638-7251