GOSSAGE

In a resumption of a war of words, Hercules Chairman Thomas L. Gossage has accused ISP Chairman Samuel J. Heyman of scaring off prospective buyers of the financially ailing company by waging a proxy fight and criticizing management. ISP holds just under 10% of Hercules' shares. "I have told you that you are damaging our sale process and our efforts to maximize shareholder value," scolded Gossage in a letter to Heyman. While Heyman claims ISP wants to be constructive, Gossage counters that "far from being constructive, we strongly believe that your actions are destructive--to our ongoing sale process [and] to our search for a permanent CEO," should no sale occur soon. Gossage rejoined Hercules last fall after Vincent J. Corbo resigned because his restructuring plan failed to stabilize the company. In December, Gossage said he would try to sell Hercules and only recently arranged the sale of its resins and rosins businesses to Eastman Chemical and peroxy chemicals to Geo Specialty Chemicals. In March, Heyman undertook a proxy fight to place four of his nominees on Hercules' board in an effort to speed the sale of the company.

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Pact is reached in South Africa AIDS drug case

 In the face of mounting protests, 39 international drug companies suing South Africa over patented AIDS drugs dropped their case last week. The firms had challenged a South African law under which the country's health officials could summarily seize drug patents so that less expensive generic versions could be produced; under this law, they could also import knockoffs into the country without consulting patent holders. Under the new agreement, which was settled almost entirely under the government's terms, the law will be implemented according to the international Trade-Related Intellectual Property Rights Agreement on patent protection, or TRIPS. GlaxoSmithKline CEO Jean-Pierre Garnier welcomed the settlement, saying, "We are delighted that the South African government has confirmed that it is committed to TRIPS."

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FMC earnings plummet 45%

Industrial chemicals factored largely into a big earnings decline at FMC in the first quarter. The company's earnings, excluding unusual items, fell 45% from the year-earlier quarter to $18.2 million. Sales fell 13% to $877 million. While pretax earnings at the company's agricultural chemicals unit were little changed from the earlier quarter and specialty chemicals were up 2.6%, earnings at the industrial chemicals unit fell 58% to $14.4 million as phosphorus operations were affected by higher energy costs and higher environmental spending. Pretax earnings in two other parts of the unit--soda ash and hydrogen peroxide--were basically unchanged from the year-ago quarter. To counter the downturn in industrial chemicals, FMC and its Astaris joint-venture partner Solutia have reduced phosphorus operations at Pocatello, Idaho, to one furnace and are selling power at a profit. FMC also is halting trona mining and idling soda ash production at its Granger, Wyo., site, to reduce costs and defer planned capital spending until business conditions improve. Energy systems and food and transportation systems, which FMC will spin off as a separate company, had pretax earnings declines of 18% and 12%, respectively.

 
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BASF starts up Malaysian oxo alcohols unit ...

BASF Petronas Chemicals, the 60–40 joint venture between BASF and Malaysian oil company Petronas, has started up a complex making oxo alcohols, phthalic anhydride, and plasticizers in Kuantan, Malaysia; the first shipments of plasticizers went to a Malaysian customer. The new complex is the second major project for the venture. The first, producing acrylics, was completed in July 2000. A butanediol complex, with capacity of 100,000 metric tons per year, is scheduled to start up next year, and there are plans to build a 50,000-metric-ton formic acid plant at the site. According to BASF, total capital spending at the site will be about $800 million.

 
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... and commits to growth in plastics

Separately, BASF has crystalized its plastics strategy with one goal: to become the world's leading and most profitable producer of plastics over the next five years. The company plans to invest some $2.2 billion in that time, said John Feldmann, BASF's board director responsible for plastics, at a company press conference in Barcelona. "For the entire world, we are expecting growth of over 5% per year" for all plastics, Feldmann said, "and BASF will grow faster than the markets with its products."

 
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Air Products, ATMI resolve disputes

Air Products & Chemicals and semiconductor material and equipment supplier ATMI, Danbury, Conn., reached an out-of-court settlement on two pending lawsuits. Though they decline to reveal terms, the companies say the settlement allows each to continue to offer the products and services that were the subject of the suits. The first lawsuit involved ATMI patents covering delivery systems for high-purity materials. The second suit was over Air Products patents covering the use of trans-1,2-dichloroethylene in the manufacture of integrated circuits.

 
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Profits up at Chinese firms

China Petroleum & Chemical Corp. (Sinopec) and its internationally listed subsidiaries reported improved results for 2000. Sinopec says its net profits after tax nearly quintupled to $3.6 billion, compared with 1999. Sales increased 40% to $39.6 billion. The company, which is largely a refiner, credits a slackening of government fuel price controls for much of the improvement. Shanghai Petrochemical reported a 22% increase in net profits to $109 million. That company attributes much of the improvement in performance to strong domestic demand and a reduction in unscheduled shutdowns. Polyester producer Yizheng Chemical Fibre reported an 11% increase in net profits to $101 million on sales of $1.1 billion, a 28% increase over 1999. Yizheng credits strong domestic demand and cost reduction for the improvement.

 
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ExxonMobil hikes isopropyl alcohol

ExxonMobil Chemical is expanding its isopropyl alcohol plant in Baton Rouge, La., by 10%, bringing capacity to 325,000 metric tons per year by June 2002. Isopropyl alcohol is used as a solvent in paints, coatings, inks, and adhesives and as a chemical intermediate. ExxonMobil says the petrochemical industry started in 1920 when chemists working for its predecessor, Standard Oil, in Linden, N.J., discovered a process of making isopropyl alcohol from gasoline by-products.

 
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Dow, Mobius link to recycle polyurethane?

Polyurethane raw material supplier Dow Chemical and Grass Valley, Calif.-based Mobius Technologies have agreed to market Mobius' polyurethane foam recycling equipment together. The arrangement builds on an earlier agreement between the two to develop polyurethane recycling equipment. The companies say the effort addresses the high amounts of waste from polyurethane manufacturing and fabrication processes as well as directives from the European Union that call for more recycling of materials used in automobiles. The Mobius equipment pulverizes polyurethane foam into a powder that can be blended with polyols used in the manufacture of polyurethane foam.

 
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Williams Bio-Energy to market ethanol

Williams Bio-Energy has agreed to market all fuel-grade ethanol produced by Quad County Corn Processors Cooperative in Galva, Iowa. This is the fifth such agreement that Williams has entered in recent months. The second-largest supplier of ethanol in the U.S., Williams produces about 130 million gal and markets about 300 million gal of ethanol per year. Williams says the motivation behind the agreements is the trend toward using ethanol as an octane enhancer in gasoline as methyl tert-butyl ether is phased out.

 
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Avecia triples DNA medicine capacity

The biotechnology division of Avecia is to invest roughly $2 million to triple its capacity to manufacture synthetic oligonucleotide medicines in Milford, Mass. The company will install a new synthesizer, as well as purification, downstream processing, and analytical equipment. The new synthesizer--which is the site's second--is due onstream in the third quarter of this year. Capacity will reach about 100 kg, with flexibility for multiproduct operations.
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Sumitomo, Mitsui talks progress

 Sumitomo Chemical and Mitsui Chemicals are advancing their plans to merge. The new company, to be called Sumitomo Mitsui Chemical, will be formed in October 2003, with the full merger completed by March 2004. In October of this year, the two will combine their polyolefin operations into a $2.5 billion-per-year company that will rejoin Sumitomo Mitsui Chemical in 2003. Together, the two companies intend to accelerate development of new resins, making use of metallocene catalysts. They also restated plans to build a 1 million-metric-ton-per-year ethylene facility in Singapore. Moreover, they intend to build large-scale methyl methacrylate facilities in Japan, South Korea, and Singapore. No time frame was specified. The companies expect to reach annual sales of $25 billion by 2006.

 
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DuPont to end production of Benlate

DuPont has informed customers that it will discontinue the manufacture of its Benlate fungicide by the end of the year. "We are advising customers that this is not a product recall but a voluntary business decision based on a review of global market conditions and other factors," says Jim Borel, vice president of DuPont's crop protection unit. Borel says DuPont is confident that Benlate is safe, but he acknowledges that the withdrawal is partly based on the high cost of defending it in court. DuPont has faced a series of lawsuits from growers who claim it damages crops.
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BUSINESS ROUNDUP

•David B. Price Jr., presi-dent of PMD Group, has resigned to pursue other opportunities. Chief Executive Steven J. Demetriou, who joined the former BFGoodrich Performance Materials business last month, assumes Price's duties.

 •Honeywell and Mitsubishi's Texas Ultra Pure unit have completed the formation of GEM Microelectronic Materials. The new company combines the two firms' U.S. businesses in wet-process chemicals used in semiconductor production.

 •Genencor is expanding its enzymes output in Latin America, where its sales are growing 20% annually. Its new $6 million coater, in Arroyito, Argentina, triples the site's granular enzyme capacity. Granular enzymes are used in the cleaning, textile, grain, and specialties industries.

 •As a result of lower demand, Goodyear Chemical is reducing production of emulsion styrene-butadiene rubber (SBR) at its Houston plant by more than 100 million lb per year. More than 40 jobs could be cut. Emulsion SBR is used mainly in tire manufacturing, which is trending toward solution SBR for its superior performance.

 •Geo Specialty Chemicals is selling its paper chemicals business to Ondeo Nalco, the chemical operation of France's Suez. Geo will keep its Harrison, N.J., plant and will supply Nalco with paper-coating products under a long-term agreement. Geo acquired the business from Henkel in 1997.

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