Dow Chemical Co. was to announce June 10 a series of far-reaching agreements with Montell Polyolefins that Dow sees as the first phase of its strategy to become one of the leading polypropylene suppliers in the world. The pacts include licensing, supply, and technology for the production, sale and marketing of PP around the world.
Under the agreements with Montell, based in Hoofddorp, the Netherlands, Dow will become a licensee and user of Mon-tell's Spheripol production process, through Technipol BV, a Montell business unit, while Montell will gain access to Dow's metallocene catalyst technology.
The deal does not include any sort of joint venture or partnership between the companies, according to Bob Wood, business vice president for engineering plastics at Dow Plastics, a unit of the Midland, Mich., firm.
In an interview June 6, Wood said Dow expects to produce PP at a site in Schkopau, Germany, by early 1998. That facility will make about 450 pounds of PP per year.
However, Dow will begin selling PP made by Montell before the end of this year, through a supply agreement with Montell that would provide Dow with millions of pounds of generic PP while the firm finishes its production facilities, Wood said. He could not be specific about how much resin the agreements involve.
Wood described the Montell products as ``seed'' resins that he expects will help Dow develop markets.
The agreements are global in scale, and by the end of 1998, Dow will be able to produce and market nearly 1 billion pounds of PP per year, he said.
By 2000, Dow expects to make and market nearly 2 billion pounds of PP resins, and to invest $300 million to $500 million in PP production facilities at Schkopau, in Tarragona, Spain, and in North America, he said. Dow sites in Plaquemine, La.; Freeport, Texas; and Sarnia, Ontario, are being considered for the North American operations. Wood indicated that the company might build more than one North American facility.
Dow said it also may build facilities at existing Dow sites in Terneuzen, Netherlands, and is exploring opportunities in the Far East, he said.
The company will replace resins made by Montell with its own brand-name resins as its facilities come into production.
Wood said Dow chose Montell's Spheripol process because of its flexibility, and compatibility with Dow's metallocene catalyst technology. The Spheripol process uses solution and gas-phase technologies to produce PP resins.
Wood emphasized that Montell and Dow will apply future developments independently of each other, and will compete both in standard grades of PP and resins produced with metallocene technology.
``We will supply an entire range of standard homopolymer and copolymer polypropylene products,'' he said. ``Our polypropylene resins will not have a brand name until we're closer to our own production.''
The agreements are driven by Dow's desire to be among the top PP producers in the world by the year 2005. Though Dow does not supply PP resins now, it does produce propylene monomer.
``This [deal] is driven by technology. As we evaluated the Spheripol process, we believed it delivers a number of benefits in terms of production and cost efficiency.'' he said. ``The process's compatibility with metallocene technology will yield quick results from our joint activity.''
Also, the agreements permit Dow to use its existing sites, production infrastructure and sales and marketing setup to produce and market PP from a very competitive position, Wood said.
Because Dow will use propylene monomer it now makes and markets, its growth in PP production will reduce its future presence as a merchant marketer of the monomer, he noted.
Dow now has 10 people involved in its PP business. Ioannis Spanudakis has been named PP business director for Dow Plastics at Horgen, Switzer-land.