RAG Subsidiary Degussa Announces Further Investments at the European Coatings Show

Expertise and Innovation in Paint and Coating Systems
“Degussa is seeking to consolidate further its already strong position in the attractive growth market of coatings,” said Dr. Manfred Spindler, a member of Degussa’s Management Board, on the occasion of the European Coatings Show in Nuremberg between May 8 and 10.

The global leader in specialty chemicals plans to invest a total of €2.2 billion in property, plant, and equipment during the period 2007–2009. About one third of this amount, more than €700 million, will flow into developing the three large integrated facilities producing, among other things, raw materials for novel coatings.

The integrated production systems for methacrylate at the Degussa sites in Shanghai, Fortier (USA), Worms, and Wesseling, for isophorone in Herne und Mobile (USA), and for silicones in Essen und Hopewell (USA) provide a secure base for the manufacture of valuable intermediates for the plastics, cosmetics, electrical, and electronics industries as well as raw materials for paint and coating systems.

Just a few weeks ago, the People’s Republic of China gave Degussa the green light for construction of an integrated production facility for methylmethacrylate and methacrylate specialties in Shanghai by 2009. The annual capacity will be 100,000 metric tons. With a volume of €250 million, this represents the company’s largest single investment at the present time. Technical service will also be stepped up, and centers for this purpose have been established in the U.S. and Asia over the last few years.

Coatings—a core competence of Degussa
With high-performance coating components and industry-specific expertise, Degussa generated sales of €1.2 billion, representing over 10 percent of Group sales, in the area of coatings in fiscal 2006. All of the leading coatings producers worldwide are supplied by a total of eight Degussa business units. On account of its research and development (R&D) expertise, the specialty chemicals group focuses on the innovative and environmentally friendly—and therefore high-growth—segments of the coatings market.

Degussa invests more than €40 million annually on R&D for coatings applications. This corresponds to about 4 percent of the sales revenue from the coatings segment, and lies well above the Group average of 2.8 percent for R&D investment. R&D focuses on the development of additives, raw materials, color systems, and specialty binders for high-end, environmentally friendly, and high-performance systems. These include, for example, nano-modified raw materials for scratch-resistant coating systems.

The global coatings market has grown by about 40 percent since the year 2000, with certain Asian countries showing the highest growth rates. Market volume, which at the end of the millennium was US$60 billion, now exceeds US$80 billion. While growth rates for the global coatings market develop for the most part in line with gross domestic product, Degussa shows growth above the average as a result of its focus on the most attractive market segments.

Interdisciplinary team ensures “Smart Formulating”
Degussa appears at the European Coatings Show 2007 under the Smart Formulating banner. This concept covers the complete development chain, from requirements definition through development of customer-specific solutions to product delivery. As in other market segments, the specialty chemicals group has combined the cross-disciplinary expertise of its eight business units in a single interdisciplinary team. This Paints & Coatings Industry Team collects information on markets and analyzes current developments. New formulations and materials based on raw-materials innovations or optimized product combinations are developed in joint projects. The expertise obtained in this way is used for group-wide research projects, particularly those focusing on basic research.