Ashland and Cargill to Form Joint Venture for Bio-based Chemicals

7 May 2007

Ashland Inc., a global chemical company, and Cargill have agreed in principle to create a new joint venture devoted solely to the development and production of bio-based chemicals. The parties intend for the new stand-alone entity to become a leading global supplier of chemicals from renewable sources.

The venture’s first product will be propylene glycol (PG). Using both licensed and proprietary technology, the joint venture will produce high-grade propylene glycol from glycerin, an abundant co-product of biodiesel production.

The joint venture expects to provide global manufacturing and marketing of bio-based PG, starting with a 65,000 metric ton-per-year plant at a yet-to-be-finalized location in Europe.

The venture anticipates a combined initial capital investment in the range of $80 million to $100 million. Details on the name, leadership and development plans are expected to be announced later in 2007.

We believe the chemical market has reached a tipping point where bio-based and petroleum-based options are both desired by the market and practical to produce. To be in a position where Ashland can offer bio-based specialty chemical products in the future, we need to help foster the creation of bio-based basic chemicals now. We are creating our future and we've found a terrific partner in Cargill to do so.

—Walter Solomon, vice president and chief growth officer, Ashland Inc.

According to Ashland market consultants, annual global production for propylene glycol totals more than 1.4 million metric tons, and research shows that global demand growing at a 3 - 7% rate. Propylene glycol is a common ingredient in a variety of resins, lubricants, cosmetics, paints, detergents and antifreeze. Today, propylene glycol is produced from propylene oxide, a petroleum-based intermediate.

Laboratory tests of the proprietary production method have shown the bio-based propylene glycol product will feature a high level of purity. In testing, the process to be used by the joint venture is efficient and produces fewer byproducts than other alternative approaches to making renewable propylene glycol, according to the companies.