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Dow and Mitsui forming major Brazilian JV for biopolymers; sugarcane ethanol as feedstock

The Dow Chemical Company and Mitsui & Co., Ltd. are forming a new Brazilian joint venture to provide biopolymer solutions to the global high-performance flexible packaging, hygiene and medical markets. This represents the world’s largest biopolymers play and is Dow’s largest investment in Brazil.

Under the terms of the agreement, Mitsui would become a 50% equity interest partner in Dow’s sugar cane growing operation in Santa Vitória, Minas Gerais, Brazil. The initial scope of the joint venture includes production of sugar cane-derived ethanol for use as a renewable feedstock source, bringing new, biomass-based feedstocks to Dow while diversifying its raw material streams from traditional fossil fuels. When complete, Dow and Mitsui will have the world’s largest integrated facility for the production of biopolymers made from renewable, sugar-cane derived ethanol.

Once fully operational, this platform will be back-integrated into renewable sugar cane, enabling environmentally sustainable production of high performance plastics with a reduced carbon footprint. Biopolymers produced at this facility will be a green alternative and drop-in replacement for the high-performance flexible packaging, hygiene and medical markets, offering customers the same performance attributes with a more sustainable environmental profile.

The first phase of the project includes the construction of a new sugarcane-to-ethanol production facility in Santa Vitória. Construction is expected to commence in the third quarter of 2011.

The transaction is expected to close before the end of 2011, pending the receipt of certain regulatory approvals. Financial details are not being disclosed.

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