The Dow Chemical Company and Befar Group yesterday announced a memorandum of understanding (MOU) for a new 50-50 joint venture to produce perchloroethylene (PCE), a key building block material for non-ozone depleting refrigerants used in industrial, automotive, consumer, commercial, building and construction, and other applications.

Under the MOU announced today, the two companies will explore development of a new, world-scale, PCE manufacturing facility in Binzhou, Shandong Province, China. The new facility would have an initial target capacity of 40 kilotons per year, with the ability to double production to 80 kilotons soon thereafter. Assuming the terms and milestones of the MOU are met and subject to customary government approvals, Dow and Binhua estimate production would begin in 2014.

According to Dow President of Chemicals & Energy, Carol Williams, the proposed joint venture with Binhua is another critical milestone toward fulfillment of the Company?s business strategy.

"We are pleased at the prospects of a new partnership with Binhua that aligns so well to both companies? strategies and allows Dow to grow our manufacturing presence in China," Williams said. "At the same time, the prospective partnership would increase our ability to meet the world?s rapidly expanding need for more sustainable product offerings, while continuing to provide a strong foundation for continued growth in our performance and market-driven businesses."

Peter Sykes, President of Dow Greater China, underscored the importance of the relationship with Binhua to Dow?s regional capabilities in China to meet customer demand in this growing marketplace.

"Our collaboration with Binhua is a fine example of two great companies partnering to serve the needs of customers for high quality, reliable solutions," said Sykes. "We look forward to jointly supporting the rapid China market growth in a sustainable and environmentally responsible manner."

Zhang Zhongzheng, the Chairman of Binhua reinforced the strategic importance of the proposed joint venture to the strategy of Binhua. He was convinced that both parties will work together toward a win-win situation, deepen the communication and cooperation, and build friendship through mutual trust for greater development. He also pointed out, "We cherish the precious opportunity to work with Dow and will work hard to keep our promises under this agreement. We will try our utmost to facilitate the execution and implementation of subsequent projects with Dow, and to boost our cooperation in a broader range of areas at higher levels in order to achieve substantial results. We sincerely hope that we can develop and grow together with Dow towards a mutually beneficial future."

Global demand for PCE as a feedstock is increasing for non-ozone-depleting fluorocarbon refrigerants in industrial, automotive and home applications. In China, the market for PCE is growing rapidly, but to date, local supply has been limited. The proposed Dow-Binhua joint venture is designed to meet this significant market opportunity.