Dow to exit chlorine business; shutting down 800 kt in the US

As part of its plan to sell or spin off commodity chemicals assets to raise up to US$4 billion, US chemicals firm Dow Chemical will separate a significant portion of its decades-old chlorine business. The assets identified by the world’s largest chlorine producer include its epoxy business, brine and energy assets and represent up to US$5 billion of total annual revenue. The business includes approximately 40 manufacturing facilities at 11 sites, and nearly 2,000 employees. But according to related news reports, the US firm is not disposing of all the chlorine business, since it needs some for its downstream activities.

Dow, like its compatriot DuPont , is moving away from commodities to focus on the segments of electronics, packaging and agriculture. The bulk of what the company plans to sell is housed in its performance materials business, which has been subjected to cyclical trends especially in terms of the commodity prices.

“It represents a continuation of the shift of our company toward downstream high-margin products and technologies that customers value, and generate consistently higher returns than cyclical commodity products. We are committed to prioritise our resources such that we maximise total shareholder return,” said Andrew N. Liveris, Dow’s Chairman/CEO.

“These businesses have served us well over decades, but are serving markets that Dow has exited over time, and we are therefore right-sizing our upstream integration to match the downstream focus that we started a decade ago,” Liveris added. “Separating these business units will allow us to further optimise the way they can be operated; and we believe different owners will be able to extract maximum value from these highly competitive assets and their related markets.”

Assets included in this carve-out are:

  • US Gulf coast Chlor-Alkali and Chlor-Vinyl facilities in Plaquemine and Freeport, including Dow’s interest in the Dow Mitsui Chlor-Alkali joint venture in Freeport
  • Global Chlorinated Organics production facilities in Freeport; Plaquemine and Stade, Germany;
  • Global Epoxy business, including assets in Freeport; Roberta, Rheinmuenster, Germany; Pisticci, Italy; Baltringen, Germany; Stade, Germany; Gumi, South Korea; Zhangjiagang, China and Guaruja, Brazil; and
  • Brine and select assets supporting operations in Freeport and Plaquemine and energy operations in Plaquemine

In addition, the company says it will shut down approximately 800,000 tonnes of chlorine and caustic equivalent capacity in Freeport, Texas. The capacity being shut down will be replaced with supply from new facilities that will come online with the start-up of the Dow Mitsui joint venture in early 2014. The shutdowns will help maintain Dow’s balances and will be coordinated with the start-up of the joint venture.

In the past 12 months, Dow has completed or announced transactions totaling US$700 million, including the recently announced agreement to divest its global Polypropylene Licensing & Catalysts business. In anticipation of this separation, the company announced in October it had expanded its divestiture target to US$3 billion-$4 billion in proceeds over the coming 18 to 24 months.


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