March 2008

ISSUE 6March

Events

ChemChina Facing the Snowstorm

Hydrophobic Anti-Ice Coating Developed by MCRIThe World's Largest DME Unit to be BuiltDongda Reconstructs Its Wastewater Treatment Pool

Heavy Snow Weighs down the Trees but Not the People

TechnologyRen Jianxin Nominated One of China's Top Economic FiguresChemChina Recognized as One of Trial Innovative CompaniesMeeting Held to Deal with Bad Weather

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Eight Standardization Committees to be Set up in ChemChinaHundreds of Millions Investment Mapped out for a Blue Sky"Zero Discharge" Pursued by Shenyang Chemical

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ChemChina Receives Australian OfficialsChemChina Welcomes Visitors from IsraelRen Jianxin Meets Guests from Morgan Stanley

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All-steel Giant Tire Manufactured by HaohuaBCMC and BJUT Found Joint Research CenterTechnology Center Jointly Established by MCRI and Qingdao City

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ChemChina Employees Face the Challenges of Ceaseless Snow

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Recognized as One of Trial Innovative Companies

The Ministry of Technology and Science, State Assets Supervision and Administration Commission (SASAC) and All China Federation of Trade Unions proclaimed ChemChina to be one of the trial innovative companies. This is the second list of trial innovative companies China has announced. The trial run for state innovative companies, proposed dur ing the Nat iona l Sc ience Conference, is designed to promote the ability to innovate within enterprises. It is a part of the Technology Innovation Guide Engineering policy issued by the Central Government. In the Notice on Trial Run of Innovative Companies, the goals, requirements, standards and assistance are well defined. This move is committed to explore effective measures to make companies more innovative by supporting their technologies, brand building, procedures, management, concepts and culture. In order to improve its industrial and product structure and build an innovative economy nationwide, China is trying to build up an innovation platform to cultivate innovation bellwethers for the national economy.

eeting Held to Deal with Bad Weather

January 29, 2008, a meeting was sponsored by Ren Jianxin to outline strategies for dealing with the difficulties the recent storm caused in south China. Low temperatures and snowfall lasted a terribly long time in China and caused great problems to the vast population of south China. Production in many factories stopped because of power failures. According to Mr. Ren, the leaders of operations should get a clear understanding of the current situation, and meanwhile, launch emergency measures to maintain smooth communication. The enterprises are required to understand the problems they face and take flexible measures to avoid any possible inefficiency. As for the factories in which production is suspended partly or completely, safety should be considered a top priority. Expertise should be emphasized when it comes to the supervision of factories which have dangerous chemicals, high-temperature and high-voltage equipment or potentially hazardous storage areas. As for the enterprises that bought property insurance, they are required to file an application in time when protecting the target product from low temperature and rain. During the interruption, the factories should examine equipment and train staff. The machines and staff should remain in place and prepare for production to resume in order to fulfill the business targets made for January. Deliberate inefficiency should be avoided and business targets made for February should be fulfilled. In addition, work rules should still be in effect. The work time should be rearranged flexibly. Extra payment should, as usual, be provided to employees who work overtime. Efforts should be made to avoid any disturbance among the employees.

CCTV granted Ren Jianxin the award of China Top Economic Figure on January 30, 2008. The award has a reputation as China's Oscar in economic circles. The criteria for the final candidates are Impetus, Responsibility and Innovation. Dr. Deng Zhonghan, Chief Director of Made-in-China CMOS Chip project, and an award winner in 2005, explained why Mr. Ren was the right choice for the award. "Starting from cleaning teapots," Dr. Deng said, "he worked his way up to become a major player in China's chemicals sector and a world-famous figure in the cleaning field. He is Mr. Ren Jianxin, the President of ChemChina." Fu Chengyu, President of China National Offshore Oil Corp. (CNOOC), another 2005 award winner, passed the trophy to Mr. Ren. Mr. Ren deserves the award: he lifted China's cleaning industry from a team of seven to a giant company in the chemical field that hires 150,000 employees and both assets and sales exceed 100 billion yuan; meanwhile, the international merger and acquisition (M&A) practices he created drew attention from the chemical field worldwide.

Ren JianxinNominated One of China's Top Economic Figures

MChemChina

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Eight Standardization Committees to be Set up in ChemChina

-- ChemChina now has 31 committees for standardization

Recently, 468 National Technical Committees of Standardization were approved to be set up by Standardization Administration of the PRC and classified into Technical Committees, Technical Subcommittees, Standardization Working Groups, and Standard-Setting Groups. Eight subsidiaries of ChemChina, including Tianhua Institute of Chemical Machinery & Automation, Southwest Research & Design Institute of Chemical Industry and BlueStar Petroleum Co., Ltd. Daqing Branch, are authorized to build eight National Technical Standardization Committees in the areas of chemical machinery and equipment, coal chemicals, organic chemicals, and other fields. Up to now,

ChemChina has been operating 31 Technical Committees of Standardization (including 12 National Technical Committees of Standardization, 16 Technical Subcommittees and three Standardization Working Groups). The National Technical Committees of Standardization are national organizations in specific fields of expertise and are responsible for classifying standardized technologies. With an increasing number of Technical Standardization Committees set up by ChemChina, the company's voice in national standards setting is expected to be enhanced, and its core competitiveness in the industry should grow even faster.

Hundreds of Millions Investment

Following last year's removal of 13 sets of high-pollution devices, Siping Haohua Chemical Co., Ltd. budgeted nearly RMB300 million this year to save more energy and further reduce emissions, in order to achieve the emission control target. Siping Haohua was once a high-polluting company finding survival very difficult with its aging manufacturing equipment, obsolete technologies, and inadequate capabilities to protect its local environment. However, since it entered ChemChina three years ago the situation has changed enormously with profits multiplied tenfold. While the business is growing in both size and strength, Siping Haohua can now shoulder its social responsibility and put environmental protection first. Take last year for example, it removed a 50,000 t/a calcium carbide unit, a 30,000 t/a sulfuric acid unit, several pharmaceutical devices and cement devices, and other high pollution devices in the course of extensive technological upgrades for the 200,000 t/a ion-exchange membrane caustic soda unit and the 200,000 t/a PVC unit. Although output has decreased slightly, the emission and discharge indicators are down significantly, enabling Siping Haohua to be a model enterprise that has done quite a good job on energy saving and emission reduction. For this year, the company has planned to focus on energy saving and emission reduction to realize green growth, and raise RMB300 million to introduce environmental protection devices, in pursuit of clear water and blue sky.

"Zero Discharge" In order to achieve its emission reduction target, Shenyang Chemical Industry Co., Ltd. has developed a series of tasks cascading into layers of individual roles with assigned responsibilities and strict reviews. Based on the primary idea of controlling total emission volumes, Shenyang Chemical has been making impressive efforts to govern the COD (chemical oxygen demand) discharges in wastewater, by perfecting technological transformation and production management in all aspects. As day-to-day monitoring, inspection and evaluation increased, new sources of pollution are strictly under control, and measures will be taken to confront the persons responsible for accidental releases. Moreover, a multi-branch security monitoring network, ranging from individual staff positions, to teams (sections), and to whole workshops, has been formed to ensure compliance with the standard for emission and discharge reduction. Shenyang Chemical has made obvious achievements in environmentally friendly operations in general, and specifically in reducing the COD discharge, by undertaking programs for cleaner production. Throughout this year, four environmental improvement projects will be completed on schedule, which are Polymerization Wastewater Treatment Project, Alkali Recycling in Silica Production and Waste Acid/Alkali Treatment Project, PVC Paste Resin Spent Caustic Treatment Project, and Chlor-Alkali Water Treatment Comprehensive Management Project. Once all four projects go live, COD discharge will be significantly decreased and the company will have completed four major steps toward its "zero discharge" management objective.

Mapped out for a Blue Sky Pursued by Shenyang Chemical

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Receives Australian OfficialsJanuary 21, President Ren Jianxin met with John Lenders, the Finance Minister of Victoria State, Australia, and his team in ChemChina headquarters. Ren said, "Qenos Australia Pty. Ltd. works very well in management, efficiency, safety and environmental protection. Qenos will actively cooperate more extensively with all levels of Australian government to promote energy-saving and to implement 'zero discharge' management." John Lenders congratulated ChemChina for its rapid development and welcomed ChemChina to great achievements in Australia. There are many opportunities for cooperation in the field of energy-saving. In March 2007, Qenos won the Australian Water-Saving Award because of its tireless efforts and outstanding achievements.

Welcomes Visitors from IsraelJanuary 16, Avraham Bigger, the Chairman and CEO o f I s r ae l i M a k h t e s h i m A g a n Industries, and his team visited ChemChina's HQ. ChemChina President Ren Jianxin met with the visitors and said, "Israeli people have a long history and time-h o n o r e d n a t i o n a l culture worthy of study and respect. Our two companies also have excellent corporate

Meets Guests from Morgan StanleyJanuary 16, President Ren Jianxin met with Mrs. Wei Christianson, a member of the Global Management Committee of Morgan Stanley and the China Region CEO, and her entourage in ChemChina headquarters. Ren Jianxin expressed his opinions on the operation of capital assets and other related businesses with the visitors. Ren said, "As ChemChina has been growing rapidly, we hope to build active win-win cooperation with global financial organizations." Mrs. Wei Christianson agreed and she congratulated ChemChina for the remarkable achievements of recent years, and said the future market prospects of ChemChina will be very good because of its own excellent management teams and the great operating model.

culture and market competitiveness. We shou ld s t r eng then cooperation to expand ou r marke tp l ace . " A v r a h a m B i g g e r d e t a i l e d t h e d e v e l o p m e n t o f Makhteshim Agan. Makhteshim Agan Industries is one of the top seven pesticide manufacturers in the world and the world's largest manufacturer of generic pesticides.

Ren Jianxin

ChemChina

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Cui Lijuan

Qingdao Spraying Polyurea Engineering Technology Center, the first engineering center based on restructuring a national institution in Qingdao, has been established in Marine Chemical Research Institute (MCRI) recently. The spraying polyurea elastomer technology that was developed in recent years is a solvent-free, environmental friendly technology. In 1995, Marine Chemical Research Institute started to develop this technology and first commercialized it in 1999. Cases proved the technology is successful in large scale projects such as engineering applications, chemical tank anti-corrosion, water pool and roof waterproofing, sports grounds, and pier fenders. In recent years, the institute has carried out nearly 10 polyurea

projects. So far it has acquired four patents, issued 38 disquisitions, published the first international polyurea monograph of "Spraying Polyurea Elastomer Technology," and developed the first domestic polyurea industry standard named "Spraying Polyurea Protective Material." Through practical experience, the institute has gained a thorough understanding and control of the spraying polyurea material formulas and performance-testing methods, and gained precious engineering expertise. The main purpose of setting up Spraying Polyurea Engineering Technology Center is to take advantage of the geographical and environmental advantages of Qingdao to keep pace with top international research on spraying polyurea. The main research will focus on functional materials to fulfill the requirements of the domestic marine industry, shipbuilding industry, marine economy and national defense to enable R&D and engineering applications to meet top international standards.

ll-steel Giant Tire Manufactured by Haohua

Li Meijun

December 22, 2007, the first TorchTM 36.00R51 all-steel giant tire was manufactured by Haohua South China (Guilin) Rubber Co., Ltd. - a tire unprecedented in China. The project, applying several self-developed patented technologies with IPRs, and supported by a Science & Technology Program from the State, is a milestone for the firm's project to start making 10,000 sets/a of giant all-steel radial engineering tires. ChemChina President Ren Jianxin congratulated the firm on the accomplishment. Haohua South China (Guilin) Rubber Co., Ltd. introduced five manufacturing facilities of mature technologies from overseas, and developed and manufactured more than 70 key equipment including tire-building machines and giant hydraulic curing presses in this project. According to the plan, it will manufacture 400 sets of tires in 2008, and then meet the designed capacity in 2009, which

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BCMC and BJUT Found Joint Research Center

Kang Jian

The Joint Research Center of Advanced Manufacturing Process & Technology has been jointly established by BlueStar (Beijing) Chemical Machinery Co., Ltd. (BCMC) and Beijing University of Technology (BJUT). The signing and unveiling ceremony was held at BJUT with some Beijing Government officials in attendance. From now on, BCMC will receive academic support for its R&D on a range of advanced technologies, helping the firm keep up with the global technological pace of high-grade, high-precision and advanced manufacturing technologies in high-end fields. In recent years, BCMC has been seeking approaches to enhance its technical strength while boosting marketing development, and thus it chose BJUT as a technical partner, a university that is well-known in China, particularly for its R&D in industrial techniques. Establishing the center will enable BJUT to apply its many advanced manufacturing processes and techniques such as laser welding of nonferrous metals, etc. in BCMC for industrialization. Meanwhile, according to the technologic demands of BCMC, BJUT will have new opportunities to continue developing new equipment, new techniques and new processes for commercialization, bringing its particular strengths to bear - integrating technology, cultivation of talents and multidisciplinary research. Additionally, the center will provide a pool of seasoned technical professionals, providing BCMC with dependable insurance for its overall technical level of manufacturing techniques.

Technology Center Jointly Established by

MCRI and Qingdao City

will yield annual sales revenues of RMB2 billion (including US$126 million through export) and annual profits of RMB550 million. All manufacturing technologies and key equipment of the project are developed by Haohua South China (Guilin) Rubber Co., Ltd. applying its patented technologies with IPRs. It has applied for 81 patents, including 41 patents for invention, 39 patents for utility and another one for design. By far, 50 of them have been accepted and seven are officially authorized.

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ISSUE 6 TECHNOLOGY

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Hydrophobic Anti-Ice Coating Developed by MCRI

Cui Lijuan, Zhang Yan

The World's Largest DME Unit to be Built

Xie Zhaoping

January 29, Ningxia Baota Petrochemical Group signed the contracts to build a 400,000 t/a DME (dimethyl ether) project with two patented technologies and engineering design provided by the Southwest Research & Design Institute of Chemical Industry (SWRDICI) and Sichuan Tianyi Science and Technology Co., Ltd. The ceremony was held in Chengdu, Sichuan Province. This is the largest DME unit to be built in the world, marking a further step in this field for China. It took Ningxia Baota Petrochemical Group one year to do the study and to research both technologies and the market trends of DME products domestically and overseas. After several rounds of talks with some well-known research institutes, Baota Group finally selected SWRDICI as its partner for technical support due to the institute's advanced, reliable and mature technologies. The project, with planned investment totaling RMB120 million, is expected to go on stream by the end of this year. An expert from SWRDICI reported that the project will adopt the method of gas-phase catalyzed synthesis of DME by dehydration of methanol. The unique design of the structure of the stripping column and the optimized flow of the separation process will obviously save energy, with steam gas consumption down by 0.5 ton per ton of output. At the same time, this design is 30% less costly to build and commission than the usual alternatives. In addition, the reaction selectivity (methanol to DME) will exceed 99.5% due to the use of a self-developed catalyst, realizing zero emission of exhaust gas on the whole and conserving feedstock (methanol). Moreover, this plant will properly treat the "three wastes" - wastewater, waste gases and solid wastes - striving for "zero discharge" of pollutants.

Reconstructs ItsWastewaterTreatment PoolD e c e m b e r 2 6 , 2 0 0 7 , a wastewater treatment pool is being reconstructed at a cost of RMB1.5 million at Shandong Dongda Chemica l I ndus t ry (Group) Company. For the last few years, Dongda has always set environmental protection as its operation focus and launched a series of projects. For example , the p roduct structure was reorganized; emissions control was enhanced to reach the discharge standard; some production devices located in urban areas were migrated to less populous areas. Finally, Dongda won a special award for "Green Chemical Industry in City." S i n c e D o n g d a a l w a y s attaches great importance to environmental protection, i t w i l l n a t u r a l l y p r o d u c e significant results in water p o l l u t i o n a b a t e m e n t . A t present , Dongda has been succes s fu l l y reeng ineered from extensive management to intensive management. As the implementation of energy-saving projects has helped greatly to reduce material and energy consumption, not only are economic and social benefits significantly improved, but the vitality of the company will keep increasing.

Since this January, South China has been suffering from frozen, rainy and snowy weather. The national economy was seriously hampered, especially the power systems. As raindrops froze on transmission towers and lines, many towers collapsed under the weight of the ice.

Recently, the Marine Chemical Research Institute (MCRI) developed a new type of fluorine- and silicon-containing acrylic resin with ultra low surface energy. The water surface contact angle of varnish coating with this specific kind of resin added is around 120 degrees - an excellent hydrophobic effect. Similarly, paints with this additive have a super-hydrophobic effect with a water surface contact angle around 150 degrees and a rolling angle less than 10 degrees. When water drops onto those surface coatings, it will fall because of the coating's hydrophobic characteristic. As no water can stick to the surface, this kind of coating could be used for anti-icing and is expected to become the jinx of ice cladding. This new technology breaks through the limitations of old ones, such as complexity of application and unevenness. Instead, coatings can be applied with a common high-pressure air spray and are capable of meeting large-area construction requirements with excellent mechanical properties.

DONGDA

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ISSUE 6 CHEMCHINA FACING THE SNOWSTORM

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-- Story about Guizhou Crystal Organic Chemical (Group) Co., Ltd.

Heavy Snow Weighs down

Mei Yong, Chen Guijun

From January 12, Guizhou province suffered extreme weather - its coldest in the last 50 years. The cold weather lasted so long that it caused great problems. Emergencies in the supplies of power, water and gas were reported in Guiyang, the capital city. Guizhou Crystal Organic Chemical (Group) Co., Ltd. had born the brunt of the difficulties. As power supplies broke down, factories had to suspend production. Emergency plans had to be launched immediately. In order to reduce losses caused by accidental falling and to protect equipment, two supervision teams were sent to the factories. The factories followed instructions and suspended production smoothly. During emergencies, the managers stayed on duty. At 22:55 January 28, 2008, power lines collapsed under the weight of gathering ice. As a result, coal gas production slowed drastically. There was only 90,000 m3 coal gas in stock, and if the power supply could not be repaired in time, the gas supply would have run out soon, leaving millions of Guiyang people without coal gas. Guizhou Crystal sent out their service engineers. The service engineers set out to tramp along the power supply lines in the snow to find the place where the breakdown occurred. Finally, they found the place where the power line had collapsed. The road was slippery with thick ice; the cable truck driver had to go very carefully. In order to prevent any possible accident, a crane went first and service engineers followed. It took them more than one hour to

cover the distance that only takes twenty minutes at normal times. At 3 a.m. January 29, the cables and other materials were sent to the site. The service engineers began to climb up the icy wire pole immediately after an electrician got a temporary power supply from a neighboring power plant. At 7:05 a.m., the cable was repaired. At 7:13, the first pump was started to generate coal gas for the city. At 7:20, the second pump was started. At 7:40, the gas flow of the coal gas plant increased from 11,000 m3/hour to 35,000 m3/hour. The production of coke oven gas was restored to a normal level. At 17:30 January 29, the water gas oven was started to produce coal gas. The city's coal gas supply was completely restored to its previous level. The long lasting icy-snow weather brought serious problems. In factories, equipment was covered with thick ice, while in residential areas, water and power supplies broke down under the weight of the snow. The employees of the property management company worked around the clock to keep the supplies running smoothly. In the factories, the employees

worked in perfect order. They checked for possible accidents and take proper measures. For instance, they serviced the machines during the downtime t o g e t r e a d y f o r l a t e r production. As for the water supplies, the water supply plant launched an emergency plan to keep water supply at a normal level. At the same time, it suspended its day-to-day production smoothly to save power for coal gas production and other public engineering.

the Trees but Not the People

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ISSUE 6 CHEMCHINA FACING THE SNOWSTORM

Employees Face the Challenges

of Ceaseless Snow

ChemChina

Since mid-January this year, a rare period of cold weather with freezing rain and snow swept across 16 provinces in China. Most areas south of the Yellow River became a world of ice. The snow, the heaviest in 50 years in many areas, fell in the central, eastern and southwestern parts of the country in recent days interrupting transport, disrupting travel, exhausting coal supplies, and paralyzing electrical systems. Many subsidiaries of ChemChina felt the snow's impact in production. Operations were severely disrupted. As delivery services for finished products and raw materials were unavailable for a couple of weeks, some companies were forced to suspend production. Faced with the unexpected turmoil, ChemChina subsidiaries took urgent responsive measures to strengthen equipment maintenance, ensure safety in production, develop inventory reduction plans, and look for new channels of raw materials. Production schedules and operation tasks were maximally guaranteed to be completed. The pictures show how companies suffering from the snow worked to ensure day-to-day production. They also illustrate the brilliant spirit of ChemChina employees in the face of hardship.

Employees are cleaning the snow on the icy road.

Accomplished device leaves the factory of Yiyang Machinery Co. on time.

The snow cleared away before work starts at Wuxi Resin Plant.Workers are covering the slippery stairs with grass mats for safety in Xinghuo Plant.

Guizhou Crystal Co. delivers its first outputs after the heavy snow.