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LANXESS: Production in Singapore to Start in 2014

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LANXESS Corp. - Technical Rubber Products
111 RIDC Park West Dr.
Pittsburgh, PA, 15275

Press release date: June 29, 2009

Postponement made necessary by drop in demand / New technology for the large-scale project / Bulk order from tire manufacturer Hankook

Leverkusen/Singapore - Due to the continuing global economic crisis, specialty chemicals group LANXESS AG is postponing the construction of its new butyl rubber facility in Singapore. Production is now scheduled to start in 2014. LANXESS will use the time to finish developing an innovative technology for butyl rubber production that will then be used at the new facility. The 100,000 tpa plant originally planned for Singapore, which would have cost up to EUR 400 million to build, had been due on stream in 2012.

"We expect the new capacity to be needed in 2014 at the earliest," said LANXESS Board of Management Chairman Axel C. Heitmann in Singapore. "Deferring the project by two years will enable us to continue development work based on a recent technological breakthrough to the point where a new process can be deployed on an industrial scale. We can then use this process in the future butyl rubber production facility on Jurong Island. That way Singapore will have the world's most modern plant with a unique process technology," Heitmann added.

Development of the technology, which so far has been successfully tested only on a pilot scale, will be vigorously driven forward over the next 24 months to enable the process to be used in Singapore. "We will invest a substantial sum for this purpose in the coming years. The new technology uses far less resources and is considerably more energy-efficient and environmentally friendly," explained Heitmann. From today´s perspective, the capital expenditures for the new plant will be slightly lower than originally planned.

Independent of the project postponement, LANXESS will continue to expand its presence in Singapore. The company is currently negotiating with the Singapore Economic Development Board (EDB) with a view to managing the global business of the Butyl Rubber business unit from there in the future. Said Heitmann: "This dynamic city is the hub of our activities in Southeast Asia and continues to play a key role in our highly successful strategy for the Asian region." The Group currently runs the Southeast Asian business of all its 13 business units from Singapore.

LANXESS is a technology leader in the global market for synthetic rubber and supplies all the leading tire manufacturers and other customers worldwide. The focus is on the premium segment, including numerous new grades of rubber for energy-saving tires with improved running properties such as braking characteristics. A five-year agreement recently signed with South Korean tire manufacturer Hankook underlines the growing importance of the Asian market. This new supply agreement for butyl rubber covers the period from 2010 through 2014. LANXESS already concluded a long-term supply agreement with Hankook, the world's seventh-largest tire manufacturer, for styrene-butadiene rubber and polybutadiene rubber in 2007. Hankook has a workforce of 14,000 and had sales equivalent to about EUR 2.5 billion in 2008.

LANXESS is a leading specialty chemicals company with sales of EUR 6.58 billion in 2008 and currently around 14,600 employees in 23 countries. The company is represented at 44 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.

Daniel Smith Head of Financial and Business Media Relations Tel.: +49 214 30-75179 Fax.: +49 214 30-50691

Rudolf Eickeler Spokesperson Financial and Business Media Tel.: +49 214 30 40483 Fax.: +49 214 30 50691
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