Eastman and Sinopec-Qilu Sign LOI to Build World Scale Plants For Latex Paint Additive and Specialty Plasticizer in China

12-22-2000: US-based Eastman Chemical Company today signed a Letter of Intent (LOI) with Sinopec Qilu Petrochemical Corporation to build world-scale derivative plants for the production of Texanol ester alcohol and TXIB plasticizer in Zibo, Shandong Province, China.

The investment is Eastman's second major project in China in the specialty chemical markets - the first, a Sino-foreign joint venture, Nanjing Yangzi Eastman Chemical Limited with Yangzi Petrochemical Industrial Corporation to manufacture Eastotac hydrocarbon tackifying resins for adhesives.

Texanol ester alcohol is the leading coalescing aid used in premium quality architectural paints around the world, while TXIB plasticizer is a primary modifier for vinyl, urethanes and other polymers for the production of consumer goods such as flooring, wallpaper, artificial leather and disposable medical examination gloves.

" The architectural paint market in China has become more sophisticated, driven by consumer demand for higher quality products. Addition of Texanol ester alcohol capacity in this growth market is a key step to maintaining our leadership position in the coatings additives market while meeting the need for growing demand from China and export markets " said Jeff Nodland, vice president and general manager of Eastman's Coatings, Inks, Textiles, And Composites Business.

Keith Gockenbach, vice president and general manager, Performance Chemicals & Intermediates Business, described the joint venture as an excellent springboard for further investment in specialty derivatives in China.

"Our partner in this venture, Qilu Petrochemical, is well known in the China petrochemicals business as a leading producer with a strong raw material position and excellent site management for large scale operations. Combining Qilu's strong position on oxo chemicals with Eastman's leading derivative technology will give the venture the most competitive position on products that are currently being imported to China," said Gockenbach.

Norman Wong, managing director of Eastman's Greater China operations said the parties will work closely to complete a joint feasibility study, negotiate a joint venture contract and obtain government approval so that construction can move forward as quickly as possible. "The joint venture will enhance Eastman's global capacity for Texanol ester alcohol and TXIB plasticizer by about 20 percent," he added. Eastman currently produces Texanol ester alcohol and TXIB plasticizer in Longview, Texas and at its oxo chemicals complex on Jurong Island, Singapore.

The signing of the LOI, a major milestone for the two companies - was achieved after extensive discussions. "Because of the time invested upfront and our very positive experience working with Sinopec in the past, we feel confident that this project will be a commercial success." added Wong.

Mr. Wang Yan Kang, General Manager of Qilu, said, "We hope that through a successful cooperation on this project, both parties will continue to look for other cooperation opportunities to build the joint venture into one of the largest production sites for value-added specialty chemical derivatives in China."

Mr. Meng Xiang De, Deputy Director of Qilu's Planning Dept., described the venture as significant step toward moving Sinopec Qilu Petrochemical downstream into the manufacture of higher value, more specialized derivatives. "The cooperation between Eastman and Qilu Petrochemical will bring together the core strengths of the two major oxo players - derivative technology and marketing from Eastman with the operational management expertise and raw material integration from Qilu," Mr Meng added.