Engineering News

Kraton, Formosa Plan to Build Taiwan HSBC Plant
July 14, 2011

Kraton Performance Polymers, Inc., a leading global producer of styrenic block copolymers, on Thursday announced the execution of a framework agreement with Formosa Petrochemical Corp. ("FPCC"), a leading global petrochemicals and plastics manufacturer, which sets forth the major terms and conditions which will, upon completion of the necessary definitive agreements, govern the formation of a 50/50 joint venture between the two companies to construct and operate a 30 kiloton hydrogenated styrenic block copolymer ("HSBC") plant to be located in Mailiao, Taiwan.

The agreement establishes a framework between Kraton and FPCC governing all commercial, operational, technical and management aspects of the planned joint venture company. Kraton and FPCC expect to finalize documentation by December 31, 2011 and currently plan to have the plant operational in the second half of 2013. The cost of the plant is currently expected to be in the range of $165 to $200 million.

"In response to growth in global demand for our differentiated grades of HSBC's, we have been evaluating alternatives for additional capacity that would employ Kraton's latest state-of-the-art technology for producing HSBC's. This announcement is the result of a comprehensive one-year site selection process involving significant Kraton resources, during which we considered several possible investment alternatives," said Kevin M. Fogarty, Kraton's President and Chief Executive Officer. "We are extremely pleased and honored to now announce this planned formation of a joint venture with FPCC, a global leader in the production of petrochemicals and plastics. FPCC's significant project execution expertise and operational resources will help ensure timely completion of the construction phase of the project. We view this joint venture project as the first step in a long-term relationship with FPCC, which may provide for future capacity expansions. Moreover, as an integral part of this strategic growth investment at Mailiao, FPCC's petrochemical complex will provide the joint venture with on-site, competitive feedstock inputs, including butadiene, as well as site services and utilities," Fogarty added. "When completed, this investment will provide significant, additional supply capability, and provide a platform to launch a series of new innovative polymers, to serve the impressive growth plans of our Asian and global customers."

"FPCC is pleased to form this partnership with Kraton, the global leader in the manufacture of hydrogenated styrenic block co-polymers, which represent a high value segment of a growing specialty polymer of the Asia Pacific markets," said Wilfred Wang, Chairman of Formosa Petrochemical Corporation. "This joint venture framework is consistent with FPCC's strategy of expanding our portfolio into high value downstream businesses. With FPCC's manufacturing and operations at our Mailiao site providing an excellent infrastructure, feedstocks, utilities and essential services, we have envisaged the success of this win-win deal for both parties."

As proposed in the framework agreement, the design of the joint venture plant will incorporate Kraton's proprietary polymerization technology, and the plant will produce Kraton's high value-added HSBC polymer grades. The plant will be operated by the joint venture and Kraton will undertake the global marketing of all products manufactured at the facility.

Kraton Performance Polymers, Inc., through its operating subsidiary Kraton Polymers LLC and its subsidiaries (collectively, "Kraton"), is a leading global producer of engineered polymers and one of the world's largest producers of styrenic block copolymers (SBCs), a family of products whose chemistry was pioneered by Kraton almost 50 years ago. Kraton's polymers are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants and lubricants, and medical, packaging, automotive, paving, roofing and footwear products. The company offers approximately 800 products to more than 700 customers in over 60 countries worldwide, and is the only SBC producer with manufacturing and service capabilities on four continents. We manufacture products at five plants globally, including our flagship plant in Belpre, Ohio, the most diversified SBC plant in the world, as well as plants in Germany, France, Brazil and Japan. The plant in Japan is operated by an unconsolidated manufacturing joint venture.

Source: Kraton Performance Polymers, Inc.

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