November 2010

ISSUE 38November

Technology

Retired Employees Celebrate the Mid-autumn FestivalEndless Blessings from Retired EmployeesMemories of the Times

Events

Cabot, BlueStar Break Ground at World's Largest Fumed Silica Plant in JiangxiBlueStar Board Member Ross McCann Wins Chemeca MedalChemChina Makes Donation to Hainan Flood VictimsCabot BlueStar Chemical Supports Public Education

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MCRI Approved to Set up Postdoctoral Scientific Research StationHaohua Zhongyi GFRP Receives National Invention PatentShenyang Chemical Improves Ionic Exchange Membrane Polar Pitch Technology

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Jiangxi Xinghuo Silicone Rewards Its Brainpower with RMB1 MillionZhenghe Petrochemical Rewards 26 Management Innovation Projects16th Tire Technology Forum Opens

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ChemChina Companies Involved in Corporate Image-building Video

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Employee World

Tianhua Institute Named "National Pilot Innovative Enterprise"Development Program Gets National Key Marine Coatings Lab OkayJinan Yuxing Chemical 100,000 t/a TiO2 Unit Operating in Full Swing

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Picture Gallery8

Project

Xinji Chemical Increases Deep Processing of Inorganic Salt ProductsSichuan BlueStar Machinery Churns out First Plate-type Hydrogenation ReactorTwo HDCWTT Projects Get NodQingping Phosphate Mine Partially Resumes Operations after Flood

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November 2010

ISSUE 38 EVENTS

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Cabot, BlueStar BreakGround at World's Largest

Fumed Silica Plant in JiangxiDu Yanqing

On September 29th, China National BlueStar (Group) Co., Ltd and U.S. Cabot Corporation broke ground on the expansion of their world-class fumed silica manufacturing facility at Xinghuo Industrial Park in Jiujiang, Jiangxi Province. The

joint venture, Cabot BlueStar Chemical (Jiangxi) Co., Ltd, will build its capacity to 20,000 t/a to become the largest fumed silica producer in the world. Mr. Hong Lihe, Deputy Governor of Jiangxi Province, attended the ground-breaking ceremony, accompanied by ChemChina and BlueStar management. Cabot Corporation, one of the world's chemical giants, is a strategic long-term partner of BlueStar. Their first cooperation came in 2005, and the joint venture has kept on growing since then. This US$43 million expansion project will use Cabot's state-of-the-art production technology to increase the JV's annual capacity threefold, from 5,000 tons to 20,000 tons. The first phase project will be commissioned at the end of 2011. Mr. Ren Jianxin, President of ChemChina said: "Cabot has been working closely with BlueStar for many years and it is because of this long-term stable cooperation that the expansion project has been possible. This project is located in the Xinghuo Industrial Park and not only employs a recycling economy through optimized resource allocation but also helps BlueStar expand its silicone business. This will enable BlueStar to provide better-quality silicone products for downstream partners. The new plant will combine the successful business models of both Cabot and BlueStar and will certainly produce more and better fumed silica products and silicone monomers."

BlueStar Board Member Ross McCann Wins Chemeca Medal

Mr. Ross McCann, a member of BlueStar's Board of Directors and Executive President of Qenos, BlueStar's Australian operating

arm, was awarded the Chemeca Medal for his outstanding contribution to the petrochemical industry of Australia and New Zealand, shortly after his election as an Honor Roll Member at the Victorian Manufacturing Hall of Fame Awards. The Chemeca Medal is the most prestigious chemical engineering award in Australia and New Zealand, and is presented jointly by the Engineers Australia's Chemical College (EACC), Australian Chemical Engineers Society (IChemE), the New Zealand Association of Chemical Engineers (SCENZ-IChemE) and the Royal Australian Chemical Institute (RACI) to individuals for their outstanding contribution to the industry in Australia and New Zealand and to the development of a new industrial field. Award winners are invited to attend an annual conference of chemical engineers and to give a keynote speeches. Qenos is the largest ethylene producer and the sole polyethylene maker in Australia. It was acquired entirely by BlueStar in 2006.

ChemChina Makes Donation to Hainan Flood Victims

On September 30th, Hainan province was struck by the island's largest rainstorm

in 50 years, which caused serious flooding in several areas, including many cities and rural counties. More than 1.64 million people suffered. ChemChina donated RMB1 million to the disaster area. The head of ChemChina, Ren Jianxin, on behalf of all ChemChina companies and employees, sent condolences to the Hainan government, and instructed the BlueStar (Hainan) Project Team, a ChemChina organization, to actively help with local disaster relief efforts. After receiving Mr. Ren's message, the secretary of the Hainan provincial party committee, Wei Liucheng, replied with a handwritten letter expressing appreciation for the much-needed assistance. The BlueStar (Hainan) project team is shown in the picture attending a disaster relief campaign held by the provincial government on behalf of ChemChina.

Cabot BlueStar Chemical Supports Public Education

Cabot BlueStar (Jiangxi) Chemical Co., Ltd works hard to be a pioneer in the

green movement with innovative concepts and superior quality, and this has led to five years of accident-free operations and four years of efficient and stable operations. While reaping economic and social benefits, the company has tried to repay society by financing the building of the Fenghuangshan Primary School in Yongxiu county, Jiangxi Province to help 50 students from poor families complete their education every year. On September 29th, the company donated RMB100,000 to the education committee of Yongxiu county to support this effort.

November 2010 2

ISSUE 38 EVENTS

Tianhua Institute Named "National Pilot Innovative Enterprise"

Wei Zhihua

The Ministry of Science and Technology (MST), the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), and the All

China Federation of Trade Unions have jointly published a list of a fourth group of state-level innovative pilot enterprises, which includes the Tianhua Institute of Chemical Machinery & Automation. This recognition marks a new height in the institute's scientific research capability and technical strength, and new leap by the institute in innovative scientific research. The Gansu-based Tianhua Institute is a major research and development institution in China's chemical and petrochemical equipment industry and has long been committed to technical, managerial and system innovations, and to constantly improving its innovation mechanism. It pays a great deal of attention to increasing research and development, and has maintained its percentage of R&D expenditures at 10% to 12% for three years in a row. In recent years, the institute has undertaken more than 140 national

key technology development projects, MST technology development projects and major technology development projects for Gansu Province, PetroChina and Sinopec, and more than 80 scientific payoffs have been recognized by technology authorities and have been put into industrial use. The institute has over 90 national patents, including 12 patents for inventions. It is responsible for or has participated in formulating of 37 national standards and 84 industry standards. Through many years of exploration and development, the institute has formed a product development, processing and manufacturing system that centers on twin-screw mixing and extruding pelletizers, large drying and packaging systems, anodic protection concentrated sulfuric acid coolers, large ethylene cracking furnaces and integrated online analytic instrument systems. Because of this, the institute has strong competitiveness and a solid foundation for sustainable and rapid growth, so it can effectively drive technological progress in China's petrochemical and chemical equipment industry.

Development Program Gets National Key Marine Coatings Lab Okay

Cui Lijuan, Li Xuchao

On September 26th, experts from R&D facilities at nine universities, research institutes, companies and industry associations across the country who studied

the feasibility of a development program for a National Key Marine Coatings Lab under the Ministry of Science and Technology auspices, unanimously concluded that this program should be implemented. During the study, the expert panel were given a feasibility report by Prof. Zhao Jun, the head and senior engineer of the lab, before examing the lab. They agreed that the research direction and objectives of the lab were well defined, had correct goals, and were in line with the development trends of marine coatings technology both at home and abroad. The proposed key lab aims at R&D of environmentally friendly, long-acting and functional marine coatings with a focus on application-oriented basic research on marine coatings, development, selection and characterization of key raw materials, and industrialization of

Jinan Yuxing Chemical 100,000 t/a TiO2 Unit

Operating in Full Swing

Chu Yuhui

During the National Day holidays, Jinan Yuxing Chemical Co., Ltd

lost no time in bringing its 100,000 t/a titanium dioxide production line A to full capacity, with an output of 670 tons, all of it top-grade. The daily output on October 3rd reached an all-time high of 105 tons since its commissioning on June 20th.

key technology. It consists of three specialized sections: antifouling coatings, heavy-duty anti-corrosion coatings and functional coatings, which will provide effective support for research and development of key and general-purpose marine coating technology, and produce high-level engineering technical personnel and industry-specific

technological progress in the country. The lab has a central scientific research site and many lab platforms are taking shape with research conditions and infrastructure that can meet the basic requirements of the project. The lab has formulated a complete management policy and has rules and regulations and has established an "open, mobile, collaborative and competitive" operating mechanism. ChemChina Marine Chemical Research Institute's strong capabilities in research and application technology for marine coatings will provide necessary f u n d i n g a n d s u p p o r t f o r t h e construction and operation of the lab.

November 2010 3

ISSUE 38 TECHNOLOGY

inji Chemical Increases DeepProcessing of Inorganic Salt Products

Wen Haicheng

On October 2nd, China Haohua Hebei Xinji Chemical Group Co., Ltd started mass production of high-purity strontium nitrate, producing 6 tons of high-quality finished products that did well in the market. This product was the second mass-produced high-value-added, further-processed inorganic salt product this year, after some special-purpose barium sulfate used for modified fibers. Since the beginning of this year, Xinji Chemical has sped up the readjustment of its inorganic salt business outline by increasing cooperation with Guizhou University, Central South China University and Hebei University of Technology and successfully completing a pilot scale test of high-purity strontium nitrate and superfine barium sulfate, after a high-purity strontium nitrate plant got underway. It is expected to come on stream in November. A superfine barium sulfate plant for its subsidiary company Shaanxi Pingli Co., Ltd is being customized and is scheduled to begin operation in January 2011. A small-scale test of barium sulfate for use with automotive coatings has been completed successfully. Products currently in the process of testing include high-purity lithium carbonate and high-purity manganous nitrate. Other products in the research and development stage are PTC-special high-purity barium carbonate, MLCC-special barium carbonate and barium carbonate specifically for liquid crystal based plate glass. During the 12th five-year plan period, Xinji Chemical will fully integrate its existing barite mineral resources and its abundant resources at the barium carbonate and barium sulfate plants in Tianzhu county, Guizhou Province and Pingli county, Shaanxi Province. The company intends to aggressively promote the deep processing and further processing of its existing inorganic salt products for production of superfine and functional products to diversify and broaden its inorganic salt product mix and increase sales revenues and profits from these further-processed products, from the current low level to over 30% after succeeding in improving its existing inorganic salt products.

ichuan BlueStar Machinery Churns outFirst Plate-type Hydrogenation Reactor

Tang Anshu

A plate-type hydrogenation reactor manufactured by Sichuan BlueStar Machinery Co., Ltd for Daqing China BlueStar Petroleum Chemical Co., Ltd left the factory on October 2nd, after a 50-hour shakedown test, marking a successful attempt by the company to tackle the technical challenge of welding a hydrogenation reactor using a special material, and adding to the wealth of experience that the company has developed in producing large hydrogenation reactors. This reactor is characterized by the use of special materials, a complicated process and a heavy workload. The entire interior layer requires a build-up welding process with stainless steel, a technically sophisticated process that demands great precision. Each welding step must be followed by a successul coloration, and ultrasonic or radiographic damage detection in order for the next step to take place. Much of the welding operation was completed using an inner-bore automatic build-up welding machine, an advanced piece of equipment. This reactor is the first of its kind at the company, and the first item ever produced by the company since its relocation from the city of Shifang to the Deyang Economic Development Zone.

Two HDCWTT Projects Get Nod

A 1,000 t/a desal ination plant-specific energy saver development

project and a photovolta ic DC-driven reverse osmosis desalination plant development project, two key technology development projects of Zhejiang Province undertaken by the Hangzhou Development Center of Water Treatment Technology (HDCWTT) , recen t l y pa s sed an acceptance check by experts from the Zhejiang Provincial Department of Science and Technology. The energy saver project involves a prototypical water-valve-controlled energy saver unit intended for use with a 3,000 m3/d desalination plant successfully developed by the Center's research personnel, which employs proprietary parts and technology. The DC-driven reverse osmosis project involves a photovoltaic DC-driven reverse osmosis desalination plant (PV-RO) previously developed by the Center.

Zhang Jianzhong

Qingping Phosphate Mine Partially Resumes Operations after Flood

Yang Hong

After being hit by a devastating flood, Deyang Haohua Qingping

Phosphate Mine Co., Ltd fought hard for two months to resume mining operations at three of the less-affected pits located at Yanziyan sec t i on , Feng tongyan sec t i on and #1160 section - without any outside help. In several days of trial operations between October 6th and 10th, these three pits operated normally, with a total output of over 3,000 tons.

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November 2010 4

ISSUE 38 TECHNOLOGY

MCRI Approved to Set up Postdoctoral Scientific Research Station

Cui Lijuan

Marine Chemical Research Institute (MCRI) was recently given the go-ahead by the Ministry of Human Resources and Social Security to set up a scientific research workstation for postdoctoral work. MCRI enjoys a lead in R&D and the industrialization of marine coatings, heavy-duty anti-corrosion coatings and specialty materials. It is involved in a large number of national key technology development projects and 863 Program projects, in the capacity of a state-level innovative

enterprise and corporate technical center in Shandong Province. A National Key Marine Coatings Lab is being built under institute auspices. The postdoctoral research station will provide the institute with access to a larger pool of highly talented people and will help it become more innovative. It will create more high-level brainpower to meet the needs of industrial development and will drive technological progress at the Institute and in the industry as a whole.

Haohua Zhongyi GFRP Receives National Invention PatentChai Yutian, Fu Xinlan

The State Intellectual Property Office (SIPO) recently granted a certificate of patent to Haohua Zhongyi GFRP Co., Ltd for its excavation-free glass fiber reinforced plastic (GFRP) inspection shaft and its construction method. This patented technology covers the setup of municipal water supply and drainage facilities and a trenchless GFRP inspection shaft and its construction. This is the result of research that the company did in the past two years in an effort to tackle the challenges of large area, high-construction-cost inspection shaft excavation, and is also the sixth technological achievement for which the company got a patent this year. Currently, the GFRP pipe-pushing process is widely used in trenchless underground pipes and is the only cost effective and best approach to modern underground pipe laying because it can easily go under streets, highways, railways and rivers without affecting surface structures and ground traffic (especially in

urban areas) and with minimal impact on the surrounding areas. A GFRP inspection shaft for use in conjunction with underground pipes is patented technology that confronted the drawbacks of massive earthworks, use of heavy machinery, and high cost and environmental impact involved in the excavation and installation of inspection shafts and serves the purpose of a small excavation area and low construction costs, and thereby enjoys a wide range of applications. This patent is the first of its kind in the industry and significantly improves the company's competitiveness in the industry. It also brings tremendous economic benefit to the company. Since the beginning of this year, the company generated additional sales of RMB15 million and profits of approximately RMB2 million by applying this patented technology extensively in the construction of the country's fifth bonded area at Meishan Island, Zhejiang Province.

Shenyang

Zou Decheng

Shenyang Chemical Co., Ltd completed a market survey, project definition and feasibility demonstration within the shortest possible timeframe last summer to increase its achievements in energy saving and emission reduction to promote environmentally friendly technology development, to pursue the clean production of caustic soda, and to implement a project to improve its ionic membrane caustic soda polar pitch technology. Following this, the company completed a technological transformation project during a production system overhaul at the end of August and brought the system back into operation in early September. The ion exchange membrane caustic soda electrolytic tank currently in use at Shenyang Chemical is a polar distance type with a 2.2 mm polar pitch, between which the portion of liquid has certain resistance in normal operation, which increases the power consumption of the tank. After extensive study and demonstrations, the company applied clean production technology for caustic

soda, that is to say, improved ion exchange membrane polar pitch technology. This new technology involves adding four layers of elastic nets, a layer of covering net and a layer of active net to the original cathode of the tank to decrease the 2.2 mm polar distance to zero and reduce the liquid voltage inside the tank, and subsequently the operating voltage applied to the tank. To quicken the pace of technological improvement, the company started a market survey, a project definition and a feasibility demonstration in early July of this year and implemented the new technology in its 150 unit tanks during a ten-day production system overhaul at the end of August. In early September, the upgraded production system was brought back into operation. This can significantly lower the tank voltage, get annual power savings of 3.4 million kWh, increase output by 25% and generate additional revenues of about RMB1.6 million, recovering the whole investment within a year.

Chemical Improves Ionic Exchange Membrane Polar Pitch Technology

November 2010 5

ISSUE 38 PROJECT

Jiangxi Xinghuo Silicone Rewards Its Brainpower with

RMB1 MillionDu Yanqing

On October 10th, Jiangxi Xinghuo Organic Silicone Plant held a meeting to reward its outstanding technologists, project managers and continuous improvement project

team with a RMB1 million bonus fund. Over the past two years, the plant has continued to improve the quality and output of its products and lowered production costs by intensifying technical innovation efforts, looking for more potential inside the organization, and pursuing a series of activities in continuous improvement, energy saving and emission reduction, with remarkable results. From 2009 to September 2010, the plant completed 10 technological research projects, 12 technical renovation projects and 11 innovation projects, one of which was a silicone high-boiling-point cracking process research project that successfully resolved the high-boiling-point problem that had long plagued the plant. This process, on the one hand, eliminated environmental concerns and safety problems caused by the high boiling point during the silicone production process, and on the other brought additional revenues of over RMB12 million a year by turning waste into valuables. The 2,500 t/a hydrogen-containing silicone oil plant expansion project, a technical renovation, not only eliminated problems with storage of hydrogen-containing monomer and some safety hazards but also generated profits of RMB3.29 million a year. When it goes into full operation, the second phase of a new 6,000 t/a amino silicone oil plant will generate annual profits of RMB5.43 million. The technical innovation project of a 30,000 t/a synthetic silicon powder storage tank blow-down renovation recovered 90 tons of silicon powder and generated RMB1.53 million in profits in a six-month period. Out of 22 continuous improvement projects conducted in 2009, there are 20 that have passed the green belt program accreditation of BlueStar HQ, with annual revenues established at RMB20 million.

Zhenghe Petrochemical Rewards 26 Management

Innovation ProjectsYan Xiaoqiang, Wang Baiding

Zhenghe Petrochemical Co., Ltd recently handed commendations and rewards to 26 successful innovation projects conducted as part of a company-wide

management innovation campaign. At the beginning of this year, Zhenghe Petrochemical set up management (service) innovation and technical innovation task forces to plan and direct innovation activities to promote technological progress, improve management performance and enhance the business efficiency of the company. At the same time, a company policy went into place to define the criteria and procedures for beginning various innovation projects as well as incentives for the successful application of innovation projects and to encourage employees to participate in innovations. Company statistics show that the departments proposed a total of 94 innovative projects in the second quarter, with 36 of them being implemented. The task forces handed out monetary rewards of RMB20,600 to 17 technical

innovation projects (including a scum reprocessing project, a decompression unit optimization operation project and a concentrated water recycling project) and 9 management and service innovation projects (including a web-based safety problem resolution facilitation project) according to the award criteria specified in the Innovation Management Implementation Procedure. This was based on an overall assessment of innovation projects in terms of employee morale, sphere of influence and economic benefits. By optimizing work processes and funding new innovative ways of doing business, these projects have improved work efficiency and quality, and have increased the overall utilization rate of resources, lowered resource consumption and bettered the operating conditions of plants.

16th Tire Technology Forum Opens

The 16th China Tire Technology Forum took place recently under the sponsorship of ChemChina Aeolus and under the auspices of ChemChina Rubber Corporation. It attracted over

200 participants, including industry experts, business executives, and representatives of raw materials suppliers, equipment manufacturers, research institutes and colleges and universities. This forum was the 16th session of a biannual event first initiated by the Beijing Research & Design Institute of the Rubber Industry (BRDIRI), Tire Industry magazine, and Rubber Industry magazine in 1981. The theme of this forum was "Technical innovation, low-carbon economy, brand building and cleaner production." Over 30 industry experts, business executives and top technologists spoke on a range

Lei Fang

of topics encompassing industry policy and legislation, industry development and market demand, new product development, application of advanced raw materials and processes, tire rolling resistance, noise and performance, energy structure optimization, energy efficiency improvement, carbon dioxide emission reduction and experience sharing for realization of clean production of tires. Some companies presented new products and technologies in tire and related industries, as part of their efforts to promote the industrialization of innovations. During the meeting, a jury composed of experts and representatives named 10 outstanding research papers out of 187, through an on-the-spot rating.

November 2010 6

ISSUE 38 EMPLOYEE WORLD

ChemChina Companies Involved in Corporate Image-building Video

ChemChina had its corporate image-building video remade by Phoenix TV in three versions - Chinese language, English and French - under the name "ChemChina on a Long Journey" in an ongoing effort to build its corporate image and boost employee

morale. Copies of the video have been distributed to all ChemChina companies at a rate of one copy for every three or four employees, in the hope that all employees will feel proud of being a part of ChemChina after watching it. Jinan Yuxing Chemical played the video for all its employees at work and many of them brought copies home to share with family members. In seeing ChemChina's tremendous achievements, they were greatly inspired and enlightened. Southwest China Haohua Chemical distributed other copies to its business divisions in the field so that employees on the frontline could understand the growth and development of ChemChina more intuitively. Siping Haohua Chemical played the video for its employees in groups, allowing them to further understand the past, present and future of the company and to be more motivated at work. BlueStar Nanjing Adisseo distributed copies of the video to all business departments since many of its employees travel frequently on business and are unlikely to get together to watch it. Many young employees asked the company's general office for copies of their own in the hope of keeping them as a memorial. The Liming Institute distributed copies to each team and group and to the sales department and gave it to its customers as a gift to allow employees and customers understand more about the development and corporate culture of ChemChina and to make the staff a more coherent unit. (Photos by Ren Chun, Shi Lei, Wen Dijia, Liu Yang, Zhou Jun, Ma Yan)

November 2010

ISSUE 38 EMPLOYEE WORLD

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Retired Employees Celebrate the Mid-autumn Festival

On September 18th, the top management of the Guizhou Crystal Organic Chemical (Group) Co., Ltd extended their best

wishes and gave money to 182 retired employees on the eve of the Mid-Autumn Festival. The company currently has over 2,700 retired employees, who receive a total of more than RMB400,000 in additional funds every year from the company. (Photo by Wu Shengtao)

Endless Blessings from Retired Employees

With a 300,000 t/a ion exchange membrane caustic soda plant and a 300,000 t/a PVC plant coming into operation soon,

employees of Heilongjiang Haohua Chemical Co., Ltd are working with growing fervor. According to a neighborhood committee arrangement, retired employees of the company took part in a wide range of recreational activities to express their confidence in the prospects of the organization. (Photo by Dong Hang, Zhang Na)

Memories of the Times

These are two photos, which were taken in the 1970s and very recently, that depict educated urban young people, 17 or 18,

going to the countryside or mountain areas for work and then a decade later joining the Liming Chemical Industry Research Institute together. After three decades of service to the Liming Institute in low-profile positions, the female employees have retired. Every time these good friends get together, the startling stories of countryside life are a topic they never tire of talking about. Whether they are sweet or bitter, the memories are lifetime ones. (Photo by Yu Jiyun, written by Wang Fei)

November 2010 8

ISSUE 38 EMPLOYEE WORLD

- Photographs and Paintings of Chinese Landscape by ChemChina Employees

Welcoming Pines at Huangshan Mountain - Han Yongtao, Huaxing Petrochemical

One Corner of An Ancient Town - Liu Wenwen, Qingping Phosphate Mine

Jiuzhai Valley in Late Autumn - Chen Pengshan, a child of ChemChina employee

Heavenly Pond - Chen Pengshan

Nature's Artwork - Wang Xiaoxue, ChemChina HQ

Sunshine after a Rainfall - Wu Chengqiang, ChemChina Rubber (Guilin)

Picture Gallery