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Sinochem and Honeywell Announce Formation of Joint Venture in China

Date:2011-10-10     Source:Sinochem Group

Meets growing demand in Asia for energy efficient and environmentally friendlier materials

On Oct. 10th, 2011, Sinochem Group and Honeywell (NYSE: HON) announced they have signed an agreement to form a 50/50 joint venture to produce and sell blowing agents for energy efficient foam insulation in China to meet growing demand in the Asia region for more energy efficient and environmentally friendlier materials. The formation of the joint venture is subject to Chinese government approval.

The joint venture, to be located in Taicang, Jiangsu Province, will produce HFC-245fa, a non-ozone-depleting rigid foam blowing agent used in insulation for appliances, construction, transportation and other applications where maximum energy efficiency is required.

The venture is expected to begin production in late 2013. Honeywell's newly launched next generation HFO lower-global-warming-potential blowing agent – Solstice™ Liquid Blowing Agent -- may also be produced by the joint venture.

"This joint venture with Sinochem, one of the strongest companies in China, will help meet growing demand for this material as Asian customers rapidly adopt more energy efficient and environmentally compliant materials," said Andreas Kramvis, president and CEO of Honeywell Specialty Materials. "Having Asian supply close to local customers is important to ensure global supply of this material in the future."

"Honeywell is a globally-renowned multinational company with diversified, leading technologies, products and services," said Yinping Wang, vice president of Sinochem Group. "The formation of the joint venture enhances our product portfolios and service capabilities in energy efficient and environmentally friendly materials, which aligns with both companies' business development strategies, and reinforces the foundation for cooperation in depth.  The joint venture depicts an exciting prospect."

China and other Asian nations are rapidly adopting hydrofluorocarbon (HFC) materials, including blowing agents and refrigerants, to comply with the Montreal Protocol on Substances That Deplete the Ozone Layer. China's Ministry of Environmental Protection requires phasing out the use of ozone-depleting blowing agent R-141b in small household appliances by 2015. At the 15th United Nations Climate Change Conference Copenhagen 2009, the Chinese government committed to a 40 to 45 percent reduction of carbon dioxide emissions in 2020 compared to the 2005 emissions level. Based on this, demand for blowing agents and the next generation of lower-global-warming-potential blowing agents in China is expected to grow significantly in coming years.

Honeywell HFC-245fa is a non-ozone-depleting HFC liquid blowing agent that provides the foam's superior insulating properties compared to other forms of insulation. Honeywell HFC-245fa blowing agent is used extensively by appliance manufacturers to insulate refrigeration equipment to meet increasing global energy efficiency requirements. It is also used in construction and transportation applications.

The new joint venture will have exclusive rights to sell HFC-245fa in the Asia region. Honeywell, which currently manufactures the blowing agent at its Geismar, La. facility, will continue to sell HFC-245fa in all other areas under its Enovate brand name.

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