BASF and DuPont plan joint venture in Asia

Business Wire, April 10, 1996

MOUNT OLIVE, N.J.--(BUSINESS WIRE)--April 10, 1996--BASF Aktiengesellschaft and the DuPont Company announced today the signing of a letter of intent to establish a joint venture to manufacture and sell nylon intermediates in Asia.

The joint venture underscores the long-term commitment of both companies to the Asian nylon market. The companies will be equal partners.

Werner Burgert, executive vice president of BASF Corporation and president of the company's worldwide Fiber Products Division, said the join venture will combine each firm's technical and manufacturing know-how and marketing skills. "The joint venture will represent a major cornerstone of the buildup of our nylon value chain in Asia," he added. "It will enable us to not only defend our global leadership position in caprolactam and nylon 6, but also strengthen our core business in the fast-growing Asian market."

"This joint venture will build the world's most competitive nylon intermediates plant, changing the competitive landscape for nylon for the next quarter century," said Eduard J. VanWely, vice president/general manager, DuPont Nylon Worldwide. "It links well with our new adipic acid plant and Zytell(R) polymer unit in Singapore and expands DuPont's position as a major nylon intermediates, polymer, and fiber producer in Asia-Pacific."

The investment in the joint venture is expected to be about $750 million. It will include construction of a manufacturing facility to produce approximately 300 kilotons of adiponitrile annually from butadiene. The facility will use the world's most competitive processes, based on combined BASF/DuPont technologies. It will convert the adiponitrile to both caprolactam for nylon 6 production and hexamethylenediamine for nylon 6.6 production at a significant cost advantage. Caprolactam capacity will be 150 kilotons annually. This will be the first time caprolactam has been produced from adiponitrile.

Nylon is used in fiber form in many textile, carpet, and industrial applications and in other forms as an engineering polymer. Nylon 6 polymer is manufactured from caprolactam while nylon 6.6 polymer is manufactured from adipic acid and hexamethylenediamine.

BASF and DuPont will work together to find a suitable site for the plant in Asia -- with the Peoples Republic of China a leading candidate. Work will commence immediately with Chinese officials to evaluate sites in that country. Sites in other locations in Asia are also being considered. Plant construction is scheduled to begin in 1998 and be completed in 2001.

The joint venture will mainly serve markets in China, as well as other Asia-Pacific customers. It will establish its own sales staff to market its products.

BASF involvement in the Asian market dates back more than 100 years, when the company began to supply dyes to China. Today, BASF, with capital expenditures in China of almost $700 million, is the largest foreign chemical investor there and is involved in eight joint ventures located in Shanghai, Nanjing, Shenyang, and Jilin. Within the next 15 years, BASF intends to both triple its sales in Asia, from $3.8 billion in 1995 to more than $10 billion and double its market share.

DuPont has also served Asia-Pacific markets for more than a century, supplying black powder to regional markets in 1863. The company has been building an integrated nylon business in the Asia-Pacific region since the early 1990s. Elements currently in place include wholly-owned facilities such as an adipic acid plant and a Zytel(R) polymer unit in Singapore, fiber spinning facilities in Australia, and compounding facilities in Japan, Korea, and Singapore. Several joint ventures have also been created as a part of DuPont's plan, including the production of nylon 6.6 salt and polymer in China and nylon fiber spinning ventures in Japan, Taiwan, and India. DuPont's participation in the joint venture with BASF further unifies the overall DuPont plan to build a powerful nylon business in Asia-Pacific.

BASF Group, with headquarters in Ludwigshafen, Germany, is one of the world's leading chemical companies, with sales in 1995 of DM 46.2 billion. BASF offers a full range of chemical and chemical-related products. It has built major strengths in science and the process of innovation, and is using these strengths to assure the company's future success in the markets it serves. These include health and nutrition, colorants and finishing products, chemicals, plastics and fibers, oil and gas, and information systems.

DuPont is a research and technology-based global chemical and energy company offering high-performance products based on chemicals, polymers, fibers and petroleum. Committed to better things for better living, DuPont serves worldwide markets in the aerospace, agriculture, apparel, automotive, construction, electronics, packaging, refining and transportation industries. Among DuPont's best known brands are Teflon(R) fluoropolymer resins; Silverstone(R) non-stick finishes; Lycra(R) brand spandex fiber; Stainmaster(R) flooring systems; Kevlar(R) aramid fiber; Tyvek(R) spunbonded olefin; Corian(R) solid surface material; and Conoco(R) fuels and lubricants.