11-Aug-2004 - Akzo Nobel nv

Eka Chemicals to Build and Operate "Chemical Island" in Brazil

Eka Chemicals, Akzo Nobel's pulp and paper chemicals business unit, has secured a 15 year supply agreement for the delivery of chemicals to the new Veracel pulp mill at Eunápolis in the state of Bahia, Brazil, jointly owned by Aracruz Celulose S.A. and Stora Enso Oyj. On completion in May 2005, the Veracel mill will be the world's largest single-line bleached eucalyptus pulp mill, with an output of around 900,000 tons per year.

As a consequence, Eka Chemicals will build and operate a "Chemical Island" adjacent to the pulp mill, which will include a chlorine dioxide plant with a 45 tons per day capacity and an oxygen production unit. The company will also build and manage the tank farm, and will handle all the pulp production process chemicals required by Veracel.

In addition, the project includes construction of a 50,000 tons per annum sodium chlorate plant, which will serve not only Veracel but also other key Eka Chemicals customers in the region. The total investment for the Chemical Island and the chlorate plant amounts to around EUR 50 million.

"The Veracel project provides a great opportunity to make an excellent investment servicing key customers in a country which shows good growth potential for this segment of our business. It clearly demonstrates Eka Chemicals' strong commitment to the pulp and paper industry for the future," said Dag Strömqvist, Member of Akzo Nobel's Board of Management responsible for Chemicals. "The new sodium chlorate plant will complement our existing Jundiaí location in Brazil and will serve customers throughout the Brazilian market."

The Veracel project marks another step in Eka Chemicals' ambition to provide pulp mills with their whole range of pulp making chemicals "over the fence." The concept includes handling the generation of chlorine dioxide on site, a process which is usually managed by the mill. This allows both the pulp mill and the chemical supplier to focus on their core operations and enhances both efficiency and safety.

"The pulp and paper industry in South America in general and in Brazil in particular is expanding rapidly, mainly based on the supply of fiber from fast-growing eucalyptus plantations," said Jan Svärd, President of Eka Chemicals. "It is the aim of Eka Chemicals to continue to supply the industry with chemicals from cost efficient local production in cooperation with the pulp and paper mills."

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