December 2010

ISSUE 39December

We Are FamilyOctogenarian's EntrepreneurshipDezhou Shihua Retirees Visit New Factory Campus

Events

National Center for Membrane Separation Technology Set Up in BeijingChemChina Technology Fund Project Accepted to RunChemChina Tyre & Rubber Guilin: National R&D Project Okayed

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MCRI: Source of Outstanding Coating EngineersHebei Shenghua Chemical to Set Up Postdoctoral Research WorkstationHaohua Yuhang Optimizing Management Organization and ProcessesQingping Phosphate Mine: Ammonium Phosphate Project Preliminarily Approved

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Enterprise Resource Planning (ERP) as I Know ItApprenticeship Meeting at Jiangxi Xinghuo Silicone

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Colorful and Enriching Life6

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Employee World

Coal Chemical Standardization Committee Sets Up Coal-to-Chemical SubcommitteeIon-Membrane Caustic Soda Technical Renovation Project Deal for Dacheng PesticideWorld's Largest Single COG-based Methanol Plant in Use

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Picture Gallery8

Project

Ultra-low Surface Energy Anti-ice Coating Reaches World ClassTianzhu Xinji Barium: Fiscal Incentive for Saving EnergyChemChina Rubber Begins OA ProjectDouble Happiness Receives Government Grant RMB10 Million

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December 2010

ISSUE 39 EVENTS

1

National Center for Membrane Separation Technology Set Up in Beijing

Yang Kun

The National Center for Environmental Protection Membrane Separation Technology officially opened in Beijing on November 20th. This center is an important part of the national

environmental technology development program, and was established to facilitate the engineering and industrialization of key membrane technology for environmental protection. This center will help both key and common problems in China's environmental technology, membrane engineering, and in the membrane industry through demonstration projects and by providing technical support and services for efforts around the country. In 2005, the State Environmental Protection Administration (now the Ministry of Environmental Protection) approved a feasibility study done by BlueStar Membrane Technology Co., Ltd

(BlueStar Environmental Engineering Co., Ltd), which proposed that a National Center for Environmental Protection Membrane Technology be built at the Beijing Airport Industrial Base. The project was subsequently implemented by BlueStar Membrane Technology Co., Ltd, BlueStar Hangzhou Development Center of Water Treatment Technology (HDCWTT) and other companies. After four years of work, the project was approved by an expert panel organized by the Ministry of Environmental Protection's Department of Science and Technology in June 2009, after a thorough examination, and on July 13th 2010, upon the science and technology department approval, the center was officially completed. The center will be managed by representatives of the founding companies, universities, and research institutes who are pursuing the commercial application of membrane technologies.

ChemChina Technology Fund Project Accepted to Run

Zhang Tao

A ChemChina Technology Fund project for 2009, involving BlueStar Environmental Engineering Co., Ltd and Shanxi Synthetic Rubber Group Co., Ltd, titled "pilot plant operation and development

of deep processing and recycling technology with neoprene rubber factory effluent," passed a ChemChina technology department check on November 3rd. Personnel involved in the project developed a pretreatment process, membrane integration technology, and equipment suitable for the deep processing of industrial wastewater left over from the production of neoprene rubber, and built a pilot test plant for processing of the plant's wastewater. After six months of testing, all the plant's technical indicators meet the contractual requirements for cost efficiency and system reliability, and provide a solid technical foundation that allows them to move forward with a commercial demonstration project for neoprene factory effluent. The panel of experts has approved the project unanimously. If we consider the current water usage rate in the Datong area of Shanxi Province, a 200 t/h commercial-scale neoprene factory effluent deep processing plant producing desalinated water from recycled sewage, as a replacement for groundwater, can result in a saving of 1.6 million tons of groundwater, and avoid RMB4.7 million in effluent fees and other expenses each year, with annual earnings of RMB2.2 million. Since its founding in 2006, the ChemChina Technology Fund has put RMB2.2 million into eight "zero discharge" effluent treatment projects that have brought in indirect investment of RMB28 million. Four of the eight projects have already passed checks, and four patents were granted out of 10 project-related patent applications. Eight research articles were published as a result. These "zero discharge" effluent treatment projects cut the use of industrial water, make use of wastewater and yield environmental, social and economic benefits. More importantly, they provide a reference framework for other ChemChina companies.

ChemChina Tyre & Rubber Guilin:National R&D Project Okayed

Li Meijun

On October 26th, an R&D project of ChemChina Tyre & Rubber Guilin Co., Ltd to develop giant all-steel radial tire production, which is part of

a National Technology Development Program, received official approval. This project, which helps solve major technological bottlenecks, met the technical requirements and resulted in a complete technology software package suitable for commercialization. There were 77 patent applications related to the project, with 38 of them approved. The project also won the

company the Most Valuable Technological Achievement award for 2009, in Guangxi Zhuang Autonomous Region. With the industrialization of giant all-steel radial tires - a landmark in China's tire-making history - China's tire makers are able, for the first time, to make giant tires with their own technology. This has good prospects because it can cut operating costs for mining companies around the country. This proprietary technology development gave the company a well-structured R&D team, significantly improved technical innovation ability, and won it a number of titles, including "State-level Corporate Technical Center," "State-level High-tech Company," "State-level Pilot Enterprise in Innovation" and "State-level Pilot Enterprise for Intellectual Property Protection." During the research and development phase, the company established a test center and a test plant for the new product, as well as a large production line.

December 2010 2

ISSUE 39 EVENTS

Coal Chemical Standardization Committee Sets Up Coal-to-Chemical Subcommittee

Xie Zhaoping

The National Technical Committee on Coal Chemical Standardization has set up a branch of ChemChina's Southwest Research & Design Institute of Chemical Industry (SRDICI). The Coal-to-Chemical Subcommittee

(branch) was established on November 2nd in Chengdu, the capital city of Sichuan Province. At its inaugural meeting, the committee discussed the drafts of coke-oven-gas-based methane production safety regulations and methanol-based acetic acid production safety regulations. Afterwards these were adopted. The subcommittee is mainly responsible for managing the technical part of coal-based chemical standardization in China, and for drafting and reviewing national standards and technical innovations and any special research in relation to coal chemical standardization. China's coal-rich but oil-deficient energy situation means that coal plays an important role in the energy structure and production of chemicals. In recent years, China's coal-chemical industry has grown rapidly, and many examples of coal-to-oil,

coal-to-olefins, coal-to-MEG (mono ethylene glycol) and coal-to-DME (dimethyl ether) production are already demonstrating this. One coal-based natural gas industrialization project is well underway. SRDICI has had a number of significant technological successes in coal-based chemicals, including the production of synthetic natural gas through the methanation of coke oven gas, the production of CNG/LNG through the deoxidation of coal mine gas, the large-scale engineering development of both a coal-to-methanol plant and a new type of high-performance methanol catalyst, and the development of a 1,000,000 t/a coal-to-DME plant. Experts say that innovation is the primary driver in the coal-chemical industry's sustainability. Modern coal-chemical technology can produce clean energy from coal, and chemical products, and significantly improve energy efficiency, while reducing carbide, sulfide and nitrogen oxide emissions, and provide strong technical support for China's chemical industry to go green.

on-Membrane Caus t ic Soda Technical Renovation Project Deal for Dacheng Pesticide

ISun Fei

Shandong Dacheng Pesticide Co., Ltd inked a contract with BlueStar (Beijing) Chemical Machinery Co., Ltd

(BCMC) on November 2nd for the technical renovation of a 90,000 t/a ionic exchange membrane caustic soda plant. This project will use an Energy Management by Contract (EMC) model in the chlor-alkali industry, a model that has never been used in the domestic chlor-alkali industry before. Dacheng Pesticide is responsible for the project site, while BCMC is responsible for financing the EMC part and for applying to the central government for energy saving and emission reduction monetary incentives that will be shared by both parties equally. This project involves the addition of four BCMC-made NBZ-2.7 membrane polar pitch natural cycle ionic exchange membrane electrolyzers in Dacheng Pesticide's existing utilities and factory buildings. The plant's wastewater can be fully recycled for the recovery of salts. Waste gas will be vented after being treated to standards, and the brine sludge can be fed into the cement makers for reutilization. Capital investment can be held to a minimum because the existing factory premises will be used to support the new installations. The plant will operate in a cost effective way, with reduced power and energy consumption, lower production cost and more competitive products. This project is expected to go into operation by June 2011.

World's Largest Single COG-based Methanol Plant in Use

Xie Zhaoping

A 300,000 t/a COG-based (coke-oven-gas-based) methanol plant designed by Sichuan Tianyi Science & Technology Co., Ltd. (Tianke)

was successfully commissioned at Xilaifeng Factory of Shenhua Wuhai Energy Co., Ltd, with methanol product meeting the international AA-class standard. This is the world's largest single plant producing methanol from coke oven gas, and a new example of China's ability to integrate innovations in COG-based methanol production. This plant employs Tianke's patented coke oven gas purification process, which incorporates two technical innovations - the first, a pure oxygen transformation process with a central nozzle, making it the two-year continuous operation of the plant possible; the second, involving

the use of a low-pressure synthesis process and energy-saving technology adopted in the separation section, with three-column fractional distillation and reformed gas heat utilization at low pressure. This plant's composite energy consumption has been estimated at 41G joules/t, 3 or 5G joules/t lower than similar plants, which means it is capable of 30,000 or 50,000 tons in savings of standard coal equivalence a year. The plant is expected to generate sales revenues of RMB800 million and profits of nearly RMB400 million a year. Producing methanol from coke oven gas is thought to be both energy-saving and good recycling and also cost efficient because its production cost per ton is RMB1,100 or RMB1,200 lower than the coal-to-methanol process, and RMB800 or RMB1,000 lower than natural-gas-based methanol production process. This new process even lets the Chinese compete with counterparts in the Middle East, where the cost of natural-gas-based methanol production is at present the lowest in the world.

December 2010 3

ISSUE 39 PROJECT

Ultra-low Surface Energy Anti-ice Coating Reaches

World ClassCui Lijuan

A new ultra-low surface-energy anti-ice coating developed by the Marine Chemical Research Institute (MCRI) that was recently tested by a panel of experts,

is said to be the first of its kind ever in China with world-class performance. This high-performance coating is made from fluorine silicone resin, as a matrix resin, mixed with fillings and other ingredients. Any surface coated with this has a smooth, polished appearance, and exhibits outstanding mechanical behavior and water resistance, allowing water molecules to contact its surface at an angle above 120°, so it can significantly delay the formation of ice and reduce ice adhesion. It is suitable for aviation and other transportation industries as well as power stations, to make surfaces more ice resistant. This product is currently in trial use.

Tianzhu Xinji Barium:Fiscal Incentive for Saving

EnergyWen Haicheng

The Financial Bureau and the Industry and Information Technology Commission of Guizhou Province's Qiandongnan Prefecture

have provided fiscal incentives for key energy-saving renovation projects in 2010, including RMB2.26 million for ChemChina Guizhou Tianzhu Xinji Barium Salts Group Co., Ltd for energy system optimization. This project mainly involves renovations to a residual heat boiler and an industrial kiln, with more than 80 percent of it having been completed. The project has a total investment of RMB6.82 million and possible standard coal savings of 15,000 tons annually, with over RMB7 million in cost savings.

ChemChina RubberBegins OA Project

Han Zhuolan, Shi Yonggang

ChemChina Rubber Corporation started its office automation (OA) project on November 3rd, marking the beginning of full-scale OA

deployment in ChemChina's third-tier companies. Yang Xingqiang, Vice-president of ChemChina, explained that the OA project would allow inter-company communicat ions and management coordination, facilitate the standardization of management practices, and produce a high-quality, efficient information network. Not only that, it will also be an effective tool for ChemChina in building core competitiveness, centralizing its business management and driving business growth. A company's employees know how important this project is to them. Yang said that implementing this project at the third-tier level would be more challenging than at the HQ level, so business executives are expected to oversee the whole process by integrating the business system and approval process for more intensive management. This project is expected to be activated next February.

Li Weiling

Double HappinessReceives Government Grant

RMB10 Million

At a meeting in Taiyuan to mark the beginning of the Top 100 Green Projects program, Double Happiness Tire Industrial Co., Ltd received

the Top 100 Green Projects certificate for its 1.2 million pieces/year all-steel radial tire plant. This project was chosen as one of a first group of Key Go-green Projects, for which it received a RMB10 million government grant. This was a follow-up to the first phase that manufactures 900,000 pieces/year of tires. It started in May 2009 and after seven months of construction work, four vulcanizing machines were in operation by the end of 2009. This project will be in full swing very soon with the mass production of Double Happiness radial tires. The inclusion of Double Happiness on the list of Top 100 Green Businesses came as a result of its urban-to-suburban relocation strategy. The radial tire plant project will help with the development of local producers of raw materials like carbon black, and contribute to the development of the local economy.

December 2010 4

ISSUE 39 PROJECT

MCRI: Source of Outstanding Coating Engineers

Cui Lijuan

The Marine Chemical Research Institute (MCRI) was recently named as a State-level Training Center for Corporate Coating Engineers, among a total of 21 companies.

Back in June, the Ministry of Education opened a nationwide engineer training program, as part of a plan to educate a million highly competent engineers in various fields within a decade. This is part of China's move to have an innovation-minded country to support modernization. MCRI was the first research institute to get involved in China's industrialization of coatings. It has been involved in a number of national key technology development projects on the strength of its National Key Lab for Marine Coatings and Postdoctoral Research Workstation. Its work in the industrialization of coating products has been outstanding, so it is in a good position to test new graduates in coating engineering. Rough statistics from more than 1,400 coating companies across the country for 2009 show an annual output of 8 million tons of coating products, a total output of more than RMB180 billion, and the number of specialists involved at more than 160,000. However, because no Chinese polytechnic school or college has a coating engineering program, new university grads or even postgrads hired by coating companies cannot work alone for a long period of time since they lacked specific knowledge. This productivity delay seriously affects the technical innovation abilities of the entire coating industry. These training centers at the corporate level help put new graduate employees on the right track right away.

Hebei Shenghua Chemical to Set Up Postdoctoral Research

WorkstationWang Jianjun

Hebei Shenghua Chemical Industry Co., Ltd recently got Chinese government approval to

establish a postdoctoral research workstation. This is another technology development method for the company, following on the heels of its Hebei Provincial Chlor-Alkali Engineering Research Center. This workstation allows the company to liaise with colleges, universities and scientific research institutes across the country where there are already postdoctoral research programs in place, and to propose technology development projects in a more active way and identify high-level postdoctoral research projects alongside company sustainability. The workstation consists of a management committee and an academic committee operating out of a general office.

Haohua Yuhang Optimizing

Management Organization and ProcessesShua Xuxiang

China Haohua Chemical (Group) Corporation began an organizational and process optimization project at Haohua Yuhang Chemical Co., Ltd on November 4th, as a way to

optimize its management system, streamline its hierarchy and work process, and improve its core competitiveness. Haohua Yuhang is a longtime chlor-alkali chemical producer and former best management award winner in Henan Province and China Haohua and its rivals recognize it for its management practices. This project, once it is completed, is expected to be copied across ChemChina's chlor-alkali sector. Accenture, an international consultancy firm, will analyze the management landscape at Haohua Yuhang, design a management process and organizational structure and optimize the KPI indicators over a 12-week period before duplicating the results for application in ChemChina's other chlor-alkali businesses.

Qingping Phosphate Mine:

Ammonium Phosphate Project Preliminarily Approved

Yang Hong, Liu Wenwen

Deyang Haohua Qingping Phosphate Mine Co., Ltd took a significant step toward starting up its

300,000 t/a sulfuric acid plant and a 200,000 t/a ammonium phosphate plant project on November 11th after the preliminary design was approved by an expert panel, prior to commencing on infrastructure construction. This project is meant to rebuild the company's facilities, something that is all the more urgent because of the harm done by the 2008 Wenchuan earthquake. It's a project that's full of hope and the company is making the "mining + chemicals" dream of several generations of employees come true. A feasibility study was completed in June 2009 and a team was set up one month later to implement the project.

December 2010 5

ISSUE 39 EMPLOYEE WORLD

Enterprise Resource Planning

(ERP) as I Know It

ChemChina held an event titled "ERP as I know it" on October 29th to describe the benefits of ERP to its employees. The event, which drew more than 180 managers and employees from ChemChina HQ and other companies, started

with a short comedy about how a beef noodle restaurant coped with challenges and leveraged business opportunities after using an ERP system. Afterwards, SAP experts shared their knowledge of ERP and described some case studies. In an effort to find the best management practices, ChemChina is exploring the possibility of strategic cooperation with the German Software Corp SAP and establishing value management evaluation offices at all ChemChina companies to ensure rcorporate value. It is only through the use of ERP and by introducing global best practices and revamping the existing system that competitiveness can be boosted and the gap between ChemChina and world-leaders narrowed. This ERP event gave many ChemChina employees a more intuitive understanding of the benefits of ERP in balancing and best managing corporate resources, especially in relation to the "three in one" model: integration of logistics, cash flow, and information flow. After the event, ChemChina CIO Ross MacAllister gave a wrap-up speech.

Apprenticeship Meeting at Jiangxi Xinghuo Silicone

Du Yanqing

The Jiangxi Xinghuo Organic Silicone Plant held its second apprenticeship meeting on November 11th, where 10 newly-

hired young workers were apprenticed to 10 technology veterans in chemical operations, electrical instruments and quality assurance. This arrangement helps apprentices learn rapidly from a "teacher" and in the process grow faster, both personally and professionally. Photo by Lu Yuanlin

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ISSUE 39 EMPLOYEE WORLD

Colorful and Enriching Life

ChemChina companies have gotten their employees involved in a wide range of cultural and recreational events as a way

of fostering corporate identity and promoting their wellbeing. These events make employees feel more involved and help them become deeply committed to the organization. Photos by Song Lianqin, Han Jingchao, Duan Lianshan, Sun Fei

A tug of war at Shenyang Paraff in Chemical Co., Ltd.

S h e n y a n g Chemical Co., L t d h e l d a singing contest t o s h o w i t s e m p l o y e e s ' ta lents on the stage.

ChemChina Oil & Gas (Jinan) Co., Ltd held a company-wide fire-safety campaign on the eve of National Fire Safety Day on November 9th to make employees more aware of the need for fire safety, prevention and risk aversion.

Shandong Dacheng Pesticide Co., Ltd held an autumn mountain trail-running competition. When the referee blew his whistle, more than a hundred contestants raced off to test themselves against a mountainous footpath.

December 2010

ISSUE 39 EMPLOYEE WORLD

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Octogenarian's EntrepreneurshipChu Yuhui

Eighty eight-year-old Liu Panyuan, the first general manager of Jinan Yuxing Chemical Co., Ltd after the company went into public-private JV model operation in 1954, expected so much to revisit the

company when he learned from the media that the company's 100,000 t/a titanium dioxide plant was commissioned. There was Liu standing in front of the titanium dioxide production line and marveling at the orderly flow of titanium dioxide packets being automatically arranged by mechanical hands. Liu understood the speed at which ChemChina and BlueStar are growing, and Jinan Yuxing Chemical's drive to become a world-class manufacturer, and he said with a smile, "Good for you! How I wish I were years younger to make a comeback!"

Dezhou Shihua Retirees Visit New Factory Campus

Recently, the trade union of Dezhou Shihua Chemical Co., Ltd arranged for more than 200 retirees to visit the new factory campus under construction at Shihua to make them more aware of the company's

plans and help them keep in touch with the company's vision of building a first-class RMB10 billion chemical industry cluster. Seeing the construction boom, the elderly visitors were very open in their sense of gratification and happiness. Photo by Li Dongying

Full of vim and vigor, by Tang Jian, Nantong Plant

We Are Family

December 2010 8

ISSUE 39 EMPLOYEE WORLD

Picture Gallery

- Photographs and Paintings of Chinese Landscape by ChemChina Employees

Childhood Memory, by Jiang Yu

Always Spring in Jiangnan Water Towns, by Shi Shaojun, Shanxi Synthetic Rubber

Autumn's Charm, by Chen Guijun

Colorful Jiuzhai Valley, by Chen Pengshan

Fishing Boat at Sunset, Li Zhonghong

Top: Bird's Eye View of Zhongguancun from ChemChina Tower's Rooftop, by Wang Xiaoxue