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May 12, 2006
Dow Chemical re-elects directors and officers
DOW CHEMICAL COMPANY, MIDLAND, MICHIGAN, MAY 11, 2006
DOW CHEMICAL BOARD OF DIRECTORS, 2006. CLICK PICTURE FOR LARGE IMAGE
Identify the Dow directors and win a genuine dinosaur coprolite
Stockholders at The Dow Chemical Company's 109th Annual Meeting today re-elected Jacqueline K. Barton, James A. Bell, Barbara Hackman Franklin, Andrew N. Liveris, Geoffery E. Merszei, J. Pedro Reinhard, Ruth G. Shaw and Paul G. Stern to the Company's Board of Directors for one-year terms.
Biographies for all directors may be found in the Proxy Statement or on www.dowgovernance.com.
Continuing as directors are Arnold A. Allemang, Jeff M. Fettig and James M. Ringler. Independent directors comprise the substantial majority of the Board.
After the Annual Meeting, the Board elected company officers. The officers re-elected were: Andrew N. Liveris, president, chief executive officer and chairman of the Board; Geoffery E. Merszei, executive vice president and chief financial officer; William F. Banholzer, corporate vice president and chief technology officer; Phillip H. Cook, corporate vice president, Strategic Development and New Ventures (until June 1, 2006); Heinz Haller, corporate vice president, Strategic Development and New Ventures (effective June 1, 2006); Julie Fasone Holder, corporate vice president, Human Resources, Diversity & Inclusion, and Public Affairs; Michael R. Gambrell, executive vice president, Basic Plastics and Chemicals Portfolio; Charles J. Kalil, corporate vice president, general counsel and corporate secretary; David E. Kepler II, senior vice president, Shared Services, Environment, Health and Safety and chief information officer; Romeo Kreinberg, executive vice president, Performance Plastics and Chemicals Portfolio; Fernando Ruiz, corporate vice president and treasurer; Gary R. Veurink, corporate vice president, Manufacturing and Engineering.
Other officers elected by the board were ; Douglas J. Anderson, corporate auditor; William H. Weideman, corporate controller; Charles J. Hahn, assistant secretary; W. Michael McGuire, assistant secretary and Thomas E. Moran, assistant secretary.
On other agenda items at the Annual Meeting, Dow stockholders:
* ratified the appointment of Deloitte and Touche LLP as the Company's independent auditor for 2006, and
* rejected four proposals submitted by stockholders.
There were approximately 641 stockholders attending in person. The meeting was also available via audio webcast on the Internet. A recording of the keynote speech, delivered by Liveris, is available at www.dow.com/webcast.
Dow is a diversified chemical company that harnesses the power of science and technology to improve living daily. The Company offers a broad range of innovative products and services to customers in more than 175 countries, helping them to provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. Built on a commitment to its principles of sustainability Dow has annual sales of $46 billion and employs 42,000 people worldwide. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.
For Editorial Information:
Jeannine Sohayda
The Dow Chemical Company
(989) 636-0626
Dow Chemical Re-elects Directors - Quick Facts
(RTTNews) - The Dow Chemical Co.said that its shareholders re-elected Jacqueline Barton, James Bell, Barbara Hackman Franklin, Andrew Liveris, Geoffery Merszei, Pedro Reinhard, Ruth Shaw and Paul Stern to the company's Board of Directors for one-year terms.
Continuing as directors are Arnold Allemang, Jeff Fettig and James Ringler. Independent directors comprise the substantial majority of the Board.
The company stated that the shareholders also elected various company officers. Dow Chemical stated that the shareholders also ratified the appointment of Deloitte and Touche LLP as its independent auditor for 2006, and rejected four proposals submitted by stockholders.
Posted by bhola at 08:00 AM | Comments (0)
Dow annual meeting a celebration of success, says Liveris
KATHIE MARCHLEWSKI, MIDLAND DAILY NEWS, MAY 12, 2006
Neil Malhothra stands in the rain holding a banner as part of a protest while a couple walks to the Midland Center For the Arts before the annual Dow Chemical Co. stockholder meeting Thursday morning. Malhothra said he came to the protest to let Dow know "we're still here and we still want them to clean (Bhopal) up."
Andrew N. Liveris' vision is to make Dow the biggest and best -- the largest, the most profitable and the most respected chemical company in the world. At Thursday's 109th annual meeting, he told shareholders that the company is getting there.
"We are already close to being the largest, if not there already," he said. "And we are working hard to drive profitability higher."
Coming off a record year of sales -- more than $46 billion -- and earnings that skyrocketed 61 percent over the year before, Liveris laid out plans for future growth and future profitability, including strategic expansion in areas such as China, Russia and India, and partnerships in the Middle East that allow access to low-cost feedstocks.
Liveris said the company's global reach, the low-cost advantages of integration and a balanced mix of business specialties are strong points that are unmatched by competitors.
Along with continued financial success, Liveris talked about good corporate citizenship. "Being the most respected means being the best investment, the best at innovation, the best place to work and the best corporate citizen," he said. He said the company plans to broaden its scope of corporate citizenship on a global basis.
Liveris also introduced a new set of 10-year sustainability goals. The 2015 program is "nothing less than improving quality of life for people the world over, even as we improve our company's bottom line," he said.
The goals include cutting energy use by 25 percent in the next decade, reducing greenhouse gas emissions by 2.5 percent per year, and using science and technology to reduce, as Liveris said, "the unsustainable global appetite for fossil fuels." Additionally, the company has set a goal of developing at least three product or technology breakthroughs that will significantly improve quality of life.
The bar is set higher than the previous 10-year goals, which ended in 2005, and will not be easy, Liveris said. "I know that, based on past performance, Dow people can and will rise to this challenge, just as they always have," he added.
Shareholders who attended the meeting -- attendance was down about 100 with the time changed to 10 a.m. from the traditional afternoon schedule -- were greeted by a group of protesters demanding Dow take responsibility for cleaning up the Bhopal, India, site of the 1980s chemical disaster that killed thousands. The site at that time was under partial ownership of Union Carbide, which Dow acquired in 2001.
"Clean up your mess," chanted representatives from Students for Bhopal, many of them students from Michigan State University.
"We keep coming because people keep dying," said Ryan Bodanyi, group coordinator, who made his fourth trip to Midland Thursday for the annual meeting. "If it was your family, wouldn't you keep coming?"
They brought water samples from Bhopal, one of which was offered to Liveris, who rejected it.
Liveris also rejected protesters' suggestion that Dow inherited legal and financial liabilities for the disaster when it acquired Union Carbide.
Union Carbide paid $470 million to the Indian government and the people of Bhopal in a settlement reached more than a decade ago.
Also at the meeting, shareholders voted against four proposals, one on the topic of Bhopal:
* The New York State Common Retirement Fund (NYSCRF) and the New York City Fire Department (NYCFD) Pension Fund co-filed resolutions in November in partnership with Amnesty International USA, Boston Common Asset Management and Sisters of Mercy Regional Community of Detroit Charitable Trust, asking Dow to report new initiatives to address health, environmental and social concerns in Bhopal.
Dow's board of directors recommended shareholders vote against the proposal; the company long has held the position that it inherited no responsibility for the tragedy when it acquired Union Carbide.
* Trillium Asset Management requested that Dow compile a report on products that might cause asthma and phase out those products.
Dow's board of directors replied there is no scientific consensus supporting Trillium's claims, and added dust mites, molds and cockroaches are known links to asthma, but pesticides are not a trigger.
* The Adrian Dominican Sisters requested that the company disclose information about genetically engineered seed.
As a producer of transgenic corn, soybean alfalfa and cotton seed products, Dow believes its extensively regulated biotech products are providing positive benefits to society and the environment.
* Green Century Capital Management Inc. asked that shareholders require Dow officials to report on the security of the company's chemical sites.
Dow's board of directors replied in the proxy that while the company agrees it is important to share detailed information about security and operations with local law enforcement and emergency responder teams, the information is sensitive. For the public's safety, it is allowed by law to keep safety assessments private.
Posted by bhola at 07:23 AM | Comments (0)
May 07, 2006
Next time you see a Dow Chemical ad, think of treachery, betrayal and Auschwitz
Through the efforts of Dow [...] the ocean is yielding its magnesium. For the first time in history man is successfully tapping this inexhaustible benefit of a metal whose phenomenal lightness gives swiftest wings to the airplane so essential to our victory drive.
THE UNMASKING OF DOW AND ITS DEAL WITH NAZI GERMANY
FROM SARVADARSHI IN CHICAGO
In 1942, the USA entered World War II and Dow Chemical ran this ad which boasted that its process for extracting magnesium from sea water would ensure victory for the Allies.
The response to these patriotic outpourings was not entirely what Dow had hoped.
"Does it not seem unfortunate," asked Congressman Leavy of Washington, "that this great nation in its hour of peril must depend upon a group whose misconduct will have been officially established in connection with strangling production by contract agreement with our enemies?"
Leavy was talking about the magnesium cartel that Dow Chemical had operated with Nazi chemical conglomerate I G Farben right up to America's entry into the war. Investigations in the early 1940s by the Truman Committee revealed that Nazi Germany had purchased large stocks of magnesium from Dow for use in incendiary bombs. Dow had been selling magnesium to the Nazis for 21¢ a pound while maintaining a 30¢ price in the US and apparently trying to shut out the British.
"Our own Dow Chemical Company," said Congressman Rabant in 1942, "was the sole licensee in this country and agreed to sell only a small amount to England."
By 1940 American output of magnesium was 6,000 tons while Germany’s was 25,000 tons, giving the Nazi war machine a distinct advantage in aircraft production.
Lying improved daily
The magnesium question came up again in 1947 during the Nuremberg trial of twenty four I G Farben officials. Willard H. Dow, Chairman of Dow Chemical, claimed: "We never had any contract with Farben." The Nation called Dow’s comment "an amazing statement".
Among the Nuremberg accused was Otto Ambros, chief of I G Farben's poison gas facilities. A Farben-owned company manufactured Zyklon B, the extermination-gas used at Auschwitz. Ambros was convicted for crimes against humanity, including slavery and murder, and sentenced to eight years in prison, however his reputation as The Devil’s Chemist didn’t make him any less attractive to his old friends at Dow. On his release from jail they invited him to come and work with them in the US.
TEXT OF ADVERTISEMENT
Straight from the mind of the chemists and engineers has come the formula to win wings from the sea.
Through the efforts of Dow [...] the ocean is yielding its magnesium. For the first time in history man is successfully tapping this inexhaustible benefit of a metal whose phenomenal lightness gives swiftest wings to the airplane so essential to our victory drive.
When victory is ours that extraordinary weight-saving metal - hundreds of millions of pounds annually - will be available for innumerable industrial and domestic purposes.
Magnesium will lighten the tasks of man in countless ways as yet undreamed of, except in the minds of far-seeing engineers and [...] who are already planning the future.
DOW AS MAGNESIUM PRODUCER
Dow Chemical started its first magnesium production in Midland, Michigan as early as 1916.
In 1941 Dow opened a 50,000 tons-per-year plant in Freeport, Texas. Production was based on electrolysis of hydrous magnesium chloride brine produced from sea water and calcined dolomite by neutralisation of magnesium hydroxide chloride gas. On contract with US Defense a second plant was built the year after, and during the war Dow's production reached 84% of the total magnesium production in USA.
1998, Dow Chemical's two plants in Freeport, Texas reached a capacity of 96,000 tpy before plant B was stopped in 1993, and plant A in 1998. Dow no longer produces magnesium.
Posted by bhola at 08:37 AM | Comments (0)
Dow's ad spend projected to be $25-30 million
FROM SARVADARSHI IN CHICAGO
Dow Chemical's CEO and chairman-elect Andrew Liveris, is looking to reposition the Dow brand and agencies Foote Cone & Belding in Chicago and Golin/Harris have been given the job of creating a new global corporate image.
Dow's reputation, following its 2001 takeover of the disgraced Union Carbide, has been on the slide and is seen to need a kiss of life. The corporation in recent years has used the slogan, "Living. Improved daily." Dow executives think they can transform public perceptions more efficiently if their business is consolidated at a single holding company.
"We are seeking to increase our penetration and leverage through consolidation of agency resources into a comprehensive and integrated program," the corporation told agencies competing for its business.
Dow has not announced how much it will spend on the global drive. Between 2000 and 2004, it spent less than $1 million annually in major measured media on corporate image ads in the U.S. [Nielsen Monitor-Plus] However, in the last year the figure jumped to more than $10 million, albeit still a modest sum for a company of its size.
Sources within Dow's agencies believe the coming ad spend will be in the $25-30 million range, based on strategies and media under discussion.
Posted by bhola at 08:22 AM | Comments (0)
Dow Chemical selects Interpublic for global advertising campaign
PR, AD PUSH PART OF EFFORT TO BURNISH CORPORATE BRAND
By Alice Z. Cuneo
AD AGE, SAN FRANCISCO, 26 MARCH 2006
Dow Chemical Co., looking to improve its global brand reputation, has selected Interpublic Group of Cos. following a holding company review for a public relations and general advertising push estimated at $20 million.
GolinHarris and Foote Cone & Belding will be the lead IPG agencies on the chemical company account.
The marketer said Interpublic was selected to "help accelerate" an integrated, corporate-reputation strategy on a global basis. GolinHarris and Foote Cone & Belding are the lead agencies on the account.
Four holding companies
The review included the ad industry's four major holding companies -- Interpublic, Omnicom Group, Publicis Groupe and WPP Group. The race ultimately came down to Interpublic's team and WPP's Burson-Marsteller and Y&R Advertising. Earlier contenders included Omincom's Porter Novelli, which had some Dow business.
In a statement, Dow said it started the review, which lasted for two months, because it wanted "key stakeholders to better understand how its products, people and actions contribute to human progress."
Contractual and legal aspects of the relationship between Dow and Interpublic will be finalized in the coming weeks.
Posted by bhola at 08:09 AM | Comments (0)
May 06, 2006
Sydney harbour fishing ban: "a problem caused by 100 years of industrial pollution by multinational companies like Union Carbide"
SYDNEY DAILY TELEGRAPH
May 05, 2006
THIRTY-one of Sydney Harbour's 44 commercial fishing operators have accepted a New South Wales Government offer to buy out their licences.
Commercial fishing was banned in the Harbour in January after high dioxin levels were detected in marine life.
Fishing operators were given until today to sign on for part of a $5.8 million compensation package in exchange for surrendering their licences.
A spokesman for Natural Resources and Primary Industries Minister Ian Macdonald today said it was possible some of the remaining 13 licensees would continue fishing on the Hawkesbury River.
The operators who surrendered their licences received payouts linked to their catch histories.
Mr Macdonald said the highest payout was $340,000.
"I'm pleased that more than 30 of Sydney Harbour's fishers have accepted the Government's offer to buy out their licences," he said.
"Sadly, and through no fault of their own, they have been caught up in a problem caused by 100 years of industrial pollution by multinational companies like Union Carbide."
Twilight for another habitat
Posted by bhola at 06:27 AM | Comments (0)
Government secrecy a no-win policy: CEO cites Enron and Union Carbide as examples of how misleading employees and the public backfires
NEW WEST, COLORADO, "THE VOICE OF THE ROCKY MOUNTAINS"
By Richard Martin, 5-05-06
Frontier Airlines chairman Samuel Addoms (whose name makes me thirsty for a refreshing malt beverage) had some advice for Denver-area high school students yesterday.
Addoms, whose airline has thrived and expanded by offering good service aboard relatively new aircraft, told a crowd of students at the 2006 Colorado Business Show, sponsored by the Metro Denver Chamber of Commerce, "Don't have any secrets."
That's advice that the Bush-Cheney administration would have been wise to have followed about, oh, five years ago.
Addoms was joined on the panel by two of Colorado's star entrepreneurs: Crocs co- founder Lyndon "Duke" Hanson and Steve Ells, the founder of Chipotle. Between them, these three companies generated $1.7 billion in revenues last year. Explaining his remarkably simple formula for business success, Addoms explained to the teenagers, "The effect is rather stunning. You eliminate the ruling class of an organization," i.e., the holders of privileged information, and you co-opt what Addoms called "the CIA" -- employees who spend way too much time ferreting out corporate secrets. "What's left over, they spend doing something useful."
These remarks bring immediately to mind the secrecy-obsessed cabal that currently hangs upside down from the rafters of the White House and other centers of power in our nation's capital. As Jack Shafer, press critic for Slate magazine, pointed out in a column earlier this week, the administration's relentless quest to shed darkness on what should be public information has turned out to be self-defeating: the permanent class of the Washington bureaucracy (i.e., those who are not beholden to George Bush or Dick Cheney for their livelihoods) has revolted, resulting in "blockbuster stories about Bush's secret prisons, secret torture programs, secret rendition operation, warrantless wiretaps, and so on."
"The government has planted the seeds of its own undoing," Tom Blanton, director of the National Security Archive, a non-governmental organization that works to collect and disseminate information relating to the federal government and national security, tells Shafer. "If you're going to decertify the press, you must also cut off alternative information sources."
That, it turns out, is not so easy to do, even for such a tight-assed group as Bush's White House. (It doesn’t help, of course, when it turns out that your own rules against pushing sensitive info to the press through back channels don't apply to the Leaker-in-Chief.)
The companies that have discovered, to their sorrow, that misleading employees and the public almost inevitably backfires range from Enron to Qwest to Union Carbide. It's too bad that our current government is clearly incapable of learning that lesson.
Posted by bhola at 06:24 AM | Comments (0)
Dow Corning earnings, sales rise
Fri May 5, 2006 8:44 AM ET
NEW YORK, May 5 (Reuters) - Dow Corning Corp. said on Friday consolidated adjusted net income rose 1 percent to $134.3 million in the first quarter of 2006, while sales rose 5 percent to $1.027 billion.
Adjusted net income for both the first quarter of this year and 2005 excludes items related to Chapter 11, from which it emerged on June 1, 2004. Including items, Dow Corning said it earned $138.0 million for the first quarter of 2006.
Dow Corning is an equally owned venture of Dow Chemical Co. (DOW.N: Quote, Profile, Research) and Corning Inc. (GLW.N: Quote, Profile, Research).
Posted by bhola at 06:05 AM | Comments (0)
May 04, 2006
Union Carbide polluted Sydney harbour with dioxins
Treatment plant shuts down for dioxin testing
By Wendy Frew Environment Reporter, May 5, 2006
THE plant being used to treat a plume of toxic chemicals beneath parts of Botany has been closed down, after it was discovered dioxin was being released from the plant into the atmosphere at higher than acceptable levels.
The Department of Environment and Conservation yesterday asked Orica, the company that operates the plant and is responsible for the contamination of the groundwater, to voluntarily shut down its treatment plant following test results that revealed dioxin emissions at levels above licence conditions.
The department's director general, Lisa Corbyn, said the plant would be shut down until the problem could be properly investigated and remedied.
"Although an Orica health risk assessment shows that these results will not have any significant impact on the community, we are taking no chances with the safety of the local residents and workers in the area," Ms Corbyn said.
Dioxins are a group of hundreds of toxic chemicals that last a long time in the environment and build up in body fat.
Dioxins came to Sydneysiders' notice recently because of high levels detected in harbour fish and in some of the commercial fishermen and their families who eat large amounts of it every week.
Ms Corbyn said when approval was granted to construct the Orica plant in February last year, there were many strict conditions attached to the consent, including stringent international standards on air emissions.
Orica told the department on Wednesday afternoon that on two recent occasions dioxin emissions had measured above those standards.
Orica began closing the plant at noon yesterday, but it will take three days before it is cool enough to enter.
Orica expects the plant to be closed for a week while work is carried out to ensure dioxin emissions do not again breach the accepted levels.
However, the company's groundwater treatment project manager, Graeme Richardson, said the closure would not affect containment of the groundwater plumes, which move very slowly.
"We have always factored in a shutdown for plant modifications if required and this is part of that process," Mr Richardson said.
The Orica contamination - left behind by the old ICI plant at Banksmeadow in the 1940s - will cost an estimated $167 million to mop up and may be the biggest and most expensive such job in the southern hemisphere.
The dioxin detected recently in Orica's monthly emission tests is a by-product of the process used to strip contaminants from the water, and then burn them at very high temperatures.
Dioxins are originally formed when material burns, such as in bush fires or the processing of household or industrial waste. They are also produced in some industrial processes, such as the manufacture of pesticides.
The State Government last month caved in to public pressure by offering the harbour's 44 commercial fishermen and their immediate families free dioxin tests.
Critics, including environmentalists and medical and chemical experts, have said the Government was not doing enough to make sure waterways were cleaned of toxic substances dumped decades ago by the likes of the chemical manufacturer Union Carbide, which is responsible for the harbour dioxins.
All fishing is banned around the old Union Carbide site at Homebush Bay and commercial fishing is banned throughout Sydney Harbour.
Posted by bhola at 11:16 PM | Comments (0)
Dow Chemical deepens ties to chempoint.com, appoints them to distribute Versene chelating agents
BELLEVUE, WASHINGTON. & MIDLAND, MICHICAN
May 4, 2006
The Dow Chemical Company today announced that ChemPoint.com has been chosen as the exclusive distributor for VERSENE(TM) CA chelating agents in the United States.
Effective May 1, 2006, VERSENE CA joins UCON(TM) fluids and lubricants and TERGITOL(TM) X-Series Nonionic Surfactants as product lines within the Specialty Chemicals business group represented by ChemPoint.
Dow's expanding relationship with ChemPoint encompasses several additional specialty products lines and brands, including CELLOSIZE(TM) hydroxyethyl cellulose, POLYOX(TM) water-soluble resins, and DOWICIDE(TM) and DOWICIL(TM) antimicrobials.
The VERSENE business team selected ChemPoint based on their proven ability to deliver targeted growth in key applications within the food and beverage industry. "The food and beverage industry continues to take advantage of the many unique and important benefits of VERSENE CA in its products," explained Kevin Lewis, Americas Marketing Manager for VERSENE chelating agents, The Dow Chemical Company. "We recognize that this industry will be well served by ChemPoint. ChemPoint's commitment to customer service and market focus will help Dow continue to service its valued customers while expanding its presence in the food and beverage market."
VERSENE CA calcium disodium EDTA is well suited for applications calling for the neutral to slightly acidic pH conditions commonly found in most food products. The principal function of VERSENE CA is to chemically bind and render inactive trace metal ions (such as iron and copper) that have an adverse impact on color, flavor, clarity, shelf life, vitamin content and other important characteristics of foods and beverages. Cleared in the United States by the Food and Drug Administration as a food additive in several key applications, typical levels of VERSENE CA used in food and beverage products add no noticeable odor, color or taste.
VERSENE CA is Kosher certified and is considered pareve for Passover use.
"Our team at ChemPoint is honored that Dow has once again selected us as their preferred distribution partner for another premier chemistry within their Specialty Chemicals business group," indicates Chad Steigers, Managing Director. "Our differentiated marketing model will quickly and effectively expose a wider audience of technical specifiers in the food and beverage industry to the unique value proposition of VERSENE CA. We are confident that we will deliver on Dow's ambitious growth objectives for this product."
Beginning today, current VERSENE CA customers can contact ChemPoint to place orders by calling 800-485-9569, faxing 425-378-8675, or ordering online at www.chempoint.com. Formulators who would like to evaluate VERSENE CA in a specific application or formulation can obtain technical assistance by calling 800-485-9569 or e-mailing verseneca@chempoint.com.
About The Dow Chemical Company
Dow is a diversified chemical company that harnesses the power of science and technology to improve living daily. The Company offers a broad range of innovative products and services to customers in more than 175 countries, helping them to provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. Built on a commitment to its principles of sustainability, Dow has annual sales of $46 billion and employs 42,000 people worldwide. 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
About ChemPoint.com
ChemPoint.com (www.chempoint.com) is the leading "e-distributor" of specialty and fine chemicals in North America, working in exclusive relationships for specific product lines with premier manufacturers. Based in Bellevue, Washington, ChemPoint provides its suppliers with marketing, sales, customer service and order fulfillment for targeted customer segments. ChemPoint is a fully owned subsidiary of Univar (Amsterdam:UNIVR), a global leader in chemical distribution.
(R)(TM) Trademark of The Dow Chemical Company ("Dow") or an affiliated company of Dow
Posted by bhola at 10:21 AM | Comments (0)
May 01, 2006
Dow Chemical looks to coal as an oil substitute
By CLAUDIA H. DEUTSCH - April 18, 2006
Coal for fuel? Pretty common. But coal as the main ingredient in wall paints, fertilizers, even grocery bags?
With oil and natural gas prices showing no signs of plummeting, and with incentives to use coal built into the Energy Policy Act of 2005, it just might happen. And chemical companies, which use oil and gas as feedstocks industry jargon for raw materials are hoping it will happen soon.
"We want to be economically feasible in the United States, and coal enables us to do that," said Andrew N. Liveris, chief executive of Dow Chemical, which has tripled its research into coal-based ingredients.
That thought is echoed by Frank Mitsch, who follows the chemical industry for the brokerage firm BB&T Capital Markets: "Coal can mean the difference between being competitive here or having to ship jobs and plants elsewhere."
In a sense, the chemical industry is simply brushing off an age-old idea. As far back as the 1900's, coal tar extracts were used to make chemicals. And the technologies have long existed to heat coal until it turns to hydrogen and carbon monoxide gas, use the gases directly to make ammonia for fertilizer, or liquefy them to use as building blocks for plastics.
But when natural gas was selling for $2 per million cubic feet, and oil was $10 a barrel, using gasified coal, which costs about $4 per million cubic feet, made no sense. Now, with gas prices still above $7 per million cubic feet and oil prices at more than $70 a barrel, it does.
According to the American Chemistry Council, the industry's cost for feedstocks hit $40.12 billion last year, up from $34 billion in 2004, $25.1 billion in 2003 and triple the $12.8 billion in 1999.
Feedstocks amounted to nearly 19 percent of the cost of the $213.75 billion in products the chemical industry shipped last year up from 17.5 percent in 2004, 14.5 percent in 2003 and just 8 percent in 1999. For companies that make feedstock-intensive products like ethylene or propylene, two building blocks for plastics, the percentage could be double that.
"It may take three or four years to fine-tune the processes and build the plants, but coal could possibly be the primary feedstock down the road," said William R. Young, an analyst at Credit Suisse.
In fact, it already is in countries like South Africa, where coal is plentiful and oil and gas are scarce. Sasol, based in Johannesburg, has been making and selling coal-based feedstocks for many years.
Several Chinese companies already use coal to make vinyl chloride monomer, a precursor to the polyvinyl chloride used to make construction products like pipes. Andrew Wood, the editor of Chemical Week magazine, said that numerous American and European companies would open plants in China to make other chemicals from coal, too. "No one's made real commitments yet, but it is clear that this is very much the beginning of a wave," he said.
Manufacturers are preparing themselves for an onslaught of orders for coal gasification equipment. General Electric, which bought ChevronTexaco's coal gasification business in July 2004, expects to get most of its profits from projects that use coal gas for generating electricity. "But in the near term, turning coal to chemicals offers the most significant opportunities," said Edward C. Lowe, general manager of gasification for GE Energy.
Mr. Lowe said G.E. had licensed its gasification technology to five large Chinese companies, and was getting "considerable interest" from American companies. G.E.'s involvement is in itself drumming up interest, said Owen A. Kean of the American Chemistry Council.
"When G.E. embraces a technology, it provides yet another form of credibility," he said.
Coal is certainly available. According to the World Energy Council, the United States had recoverable reserves in 2004 of about 254.4 billion tons; China has 114.5 billion tons. "Coal and renewables like corn are probably the only natural resources we won't run out of," said Edward S. Glatzer of Nexant, a chemical industry consulting firm.
Miners, meanwhile, are taking a fresh look at old mines. International Coal owns a large stock of low-grade coal reserves in Indiana and Illinois that had not previously been economical to mine. Wilbur L. Ross Jr., the company's chairman, said he was exploring whether to gasify those reserves for use as feedstock.
"We've got a whole bunch of pipelines within 30 miles of the mines in each direction, and as long as natural gas stays above $6.50, the math works very well," he said.
Even in the unlikely event that natural gas prices drop, gas shortages may still work in coal's favor. Agrium, the Canadian fertilizer company, has a huge ammonia plant in Kenai, Alaska, that is operating at half capacity because of gas shortages. Agrium will decide by this summer whether to invest close to $1 billion to install equipment to convert coal to feedstock and fuel, as well as capturing carbon dioxide that it could sell.
"There's enough coal nearby to operate this complex for more than 50 years," said Lisa Parker, a specialist in government and community relations for Agrium US.
But coal is catching on even in areas where gas is plentiful. Eastman Chemical, once a part of Eastman Kodak, already derives 20 percent of its raw materials from coal in the United States, and in September, Gregory O. Nelson, its executive vice president, told analysts, "We're asking ourselves, 'What if we could bring 30 percent to 40 percent of our raw material base from coal?' "
David N. Weidman, chief executive of Celanese, a chemical company based in Dallas, is asking similar questions. "Coal is easy to access, it's in politically stable regions, and the technologies exist to eradicate environmental impacts," he said. "It's been an underappreciated feedstock for much too long."
It is more expensive to turn coal into a substitute for oil than for gas, but companies that use oil as feedstock are taking a closer look at coal.
"Crude oil still seems the most practical raw material for us, but we certainly are staying abreast of any technologies that could change the economics of our products," said Barry A. Phillips of Bayer Material Science, which makes plastics.
BASF, the world's largest chemical company, has committed $121 million over the next two years to research alternative raw materials, "and yes, coal is on the list," said John Maurer, a BASF spokesman.
For now, though, most chemical companies are piggybacking experiments with coal on their strategies for penetrating emerging markets.
Dow Chemical and Shenhua, China's largest state-run coal producer, are discussing whether to jointly build a plant that would use coal to make ethylene and polypropylene. Celanese is building plants in Nanjing, just north of Shanghai, that will use coal-derived feedstocks to make acetic acid, used in such products as cigarette filters. James S. Alder Jr., vice president for operations, does not rule out the idea of eventually converting the company's American plants to coal, too.
"Coal is a viable long-term feedstock," he said. "That's true for China, for the U.S., for any place with an abundant coal supply."
Posted by bhola at 08:22 AM | Comments (0)