May 2012 Newsletter

Newsletter

ISSUE 56May

Corporate Safety Culture

Work Safety in Spring

Wu Bangguo Has Inspection Tour of Aeolus TyreWen Jiabao Attends Bluestar-Iceland Signing Ceremony

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Li Jia Named Chinese Businesswoman of 2011Haohua Honghe Named Most Trusted Company in Sichuan for the 21st TimeZhonghao Chenguang Named Home of Model WorkersHP Experts Visit ChemChina Petrochemical (Tianjin)

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Bluestar Machinery Completes In-situ RenovationBluestar Dongda Cooperates with Qingdao University in Training SeminarShenghua Pioneering in Comprehensive Resource Utilization for Hebei

Continuous Improvement Across ChemChina6

Expansion Makes Xinghuo World's Largest Fumed Silica PlantChemChina Begins DCFO Training SeminarChina's First CoPEEK Macromolecule Material Plant

Safety Culture at Home8

Haohua Yuhang Industrializes Dechlorination and Saline Water RefinementEthanol Production Demonstration in HenanChina's First Tire Plant Open to General Public

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Events

Continous Improvement

May 2012 Newsletter

NewsletterISSUE 56 EVENTS

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Wu Bangguo Has Inspection Tour

of Aeolus Tyre

On April 15, Wu Bangguo, the chairman of the National Peoples Congress standing committee, paid a visit to the Aeolus Tyre factory in western China, where he was shown around the 150,000 pieces/year all-steel

radial tire plant and 5-million pieces /year high-performance passenger-car radial tire plant at the new factory premises. This was Wu's second visit to the Aeolus Tyre plant, the first having been more than a decade ago. Looking at a bulletin board in the curing department of the first plant, Wu took evident pleasure in seeing some photos of his earlier visit, to another factory, in 1996, and he seemed to share the same nostalgic feelings as Aeolus employees. When he made that visit on July 1 of 1996, he was vice-premier of the State Council. Back then, the company already had annual sales of more than 900 million yuan, and, in the intervening years, especially after Aeolus joined ChemChina, it has grown rapidly,

with sales hitting 10 billion yuan in 2011 and record industry ranking. The visit took place before the plant's 3-day public showcase program (see below), the first for the industry and a gesture that Wu saw as a better way to make the organization more visible to the general public. Wu listened to comments on the company's market share and how Aeolus Tyre products are used in China. Wu emphasized the need for tire makers like Aeolus to make product quality a top priority while developing domestic and overseas markets. Wu also expressed his appreciation of the safety culture at Aeolus. He commented on Aeolus Tyre's top product development program and go-global strategy, and asked the company to continue to improve technical innovation to make it more competitive and to work hard to reach global quality standards.

Wen Jiabao Attends Bluestar-Iceland Signing Ceremony

There was a signing ceremony for an MOU between Bluestar and the Iceland government the afternoon of April 20, at the National Cultural Palace in Reykjavik, Iceland's capital. The MOU is on the cooperation on

solar polysilicon and metal silicon projects. The ceremony was witnessed by China's Premier Wen Jiabao and Iceland's Prime Minister Johanna Sigurdardottir. The Bluestar Elkem Iceland Co, which is central to the cooperation project, is located in Grundartangi, Iceland and has over 200 employees. It is the largest foundry business in Iceland and one of Elkem's 16 main factories worldwide, with sales of 1.2 billion kr ($200 million), and contributed to 1.5% of Iceland's GDP in 2011. Bluestar Elkem Iceland's previous owners were the Iceland government and Elkem, but after 2003, it became owned solely by Elkem. The Iceland government expects Bluestar to increase its investment in Iceland and there was an initial agreement to build a 12,000-t/a metallurgical-process solar polysilicon plant and a 65,000-t/a metal-silicon plant for about $1bn, conditions allowing. Elkem has a 108-year history. It is a global leader in silicon materials, castings, carbon, and solar-

grade polysilicon. On April 14, 2011, ChemChina's Bluestar Co acquired 100% of Elkem for $2bn. The signers of the MOU were Bluestar's President Robert Lu and Iceland's Minister of Industry, Energy and Tourism Gudbjartur Hannesson.

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ISSUE 56 EVENTS

Du Yanqing

Expansion Makes Xinghuo World's Largest Fumed Silica Plant

The Cabot Bluestar Chemical (Jiangxi) Co Ltd, a joint venture of Bluestar and Cabot (a global leader in the chemical industry and long-term strategic partner of Bluestar), completed an expansion project at its fumed silica plant on April 19.

Cabot Bluestar Chemical went into operation in April 2006 as China's first fumed silica plant to reach world-class status, technically and economically. It has an annual output of 4,600 tons. This plant not only generates economic benefits and high-performance products, but also processes silicone-production

byproducts from the Jiangxi Xinghuo Silicone Plant, which allows the two partners to allocate resources optimally with a recycling approach. More importantly, the JV means a substantial step forward for both Cabot and Bluestar in social responsibility, resource conservation, and responsible environmental stewardship. Work on the project began in Sept 2010 with an investment of $43 million. When it is in full operation, this state-of-the-art plant will have an annual output of 15,000 tons, making it the world's largest fumed silica plant.

ChemChina Begins DCFO Training Seminar

ChemChina's first deputy-CFO training seminar kicked off on April 9 at the Central University of Finance and Economics. This four-month seminar provides off-the-

job training for 64 deputy chief financial officers, selected from major ChemChina companies through screening and overall ratings. ChemChina believes that finding and developing talented people is a critical way to build sustainability and one of the most important ways to reach the goals of the 12th Five-year Plan.

China's First CoPEEK Macromolecule Material PlantQiao Xiaomei

China's first industrialized CoPEEK demonstration plant, designed by the Tianke Co, Ltd, was commissioned in early March, at the Liaoning Panjin Zhongrun Co, Ltd. It was

designed to produce products that meet European and American quality standards and is currently in stable operation and has reached production capacity. CoPEEK is a new type of resin and engineering plastic. It is a linear, aromatic macromolecule compound with some of the best all-round

properties among specialty engineering plastics. It has good strength, and is highly resistant to heat, radiation, corrosion, fatigue, and abrasion. It is mainly used in the manufacturing of wire and cable insulation materials, for piston ring instrument and sensors, for structural materials in aircraft, medical devices and coatings. The patented CoPEEK synthesis technology was one of the key research items of China's "863" program and its industrial use will generate more social and economic benefits.

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ISSUE 56 EVENTS

Haohua Yuhang Industrializes Dechlorination and Saline Water Refinement

Shua Xuxiang, Jiao Gaocheng

A Haohua Yuhang Chemical Co representative spoke with reporters on April 12 on the operation of their plants that were commissioned in March 2011. The spokesperson said the 240,000-t/a ion membrane

caustic soda plant and the 200,000-t/a PVC resin plant had both met design specifications and national quality standard and used ion-membrane caustic-soda dechlorination and saline water refinement technology that the company had developed itself. This technology, which is the first of its kind in China's chlorine alkali industry, can cut sodium sulfite, sodium hypochlorite, and barium chloride consumption power worth

8.5 million yuan annually. It also stops the discharge of 1,600 tons (dry basis) of brine sludge each year, on the 540,000-t/a unit. The technology was patented by the State Intellectual Property Office in Aug 2010 and took second place in the China Petroleum and Chemical Industry Association (CPCIA) technical invention awards in Oct 2011. It uses a simpler production process, fewer additives (and fewer types), produces less brine sludge discharge, and has better production indicator controls than the technology used at similar plants around the country. It also cuts the amount of capital investment by 1 million yuan for a 200,000 t/a plant.

Ethanol Production Demonstration in Henan

Xie Zhaoping

The Work on China's first 200,000-t/a acetic acid esterification hydrogenation-based ethanol demonstration plant began on April 13 using Southwest Research & Design Institute of

Chemical Industry (SRDICI) technology. The plant is located at the Henan Shunda Chemical Technology Co, Ltd. This approach replaces the conventional fermentation method of ethanol production, extends the acetic acid value chain, addresses overcapacity problems in the acetic acid industry and provides technological support for alternative energy use. SRDICI has been developing this technology since 2008 and, in the R&D process, found a new acetic-acid ester hydrogenation catalyst. It continued looking for the best processing conditions for acetic acid hydrogenation, by means of a small-scale test, single-tube modular test, and pilot plant test. It now has six national patents on the new process and technology, with four innovations: an acetic acid esterification and hydrogenation process that means no corrosive substance is generated during the reaction process and only moderate requirements for building the equipment, hence less capital investment; a non noble metal catalyst with low cost, good activity, high performance, conversion rate of up to 97%, and ethanol selectivity of 98%; acetic acid and ethanol produced simultaneously; an ethanol product that meets fuel additive criteria (dehydrated alcohol). This 500-million-yuan project is expected to be put into operation by the end of 2013, with average annual sales estimated at 1.3 billion yuan and annual profits at 70 million yuan. Some experts believe that the extensive application of this technology could address the capacity problems of the acetic acid industry and result in the development of acetic acid esters as a new means of capacity expansion in the acetic acid industry.

China's First Tire Plant Open to General Public

He Fazhan

Aeolus Tyre inaugurated its public opening April 16-18, the first such event in China's tire industry. It is expected to promote mutual understanding

with the general public and build Aeolus Tyre's corporate image, transparency, openness, environmental friendliness, and harmony with the community. It was well received by the visitors and lead to a dialogue with the general public. Features of the public opening: A company profile, a tour of the production line, data center, and environmental facilities, green tire lectures, new product presentations, an award ceremony for marketing and Q1 professional excellence, invited speeches, a call for articles with an "Aeolus in My Eyes" theme.

The event showed Aeolus's commitment to public service and green tires and gave the visitors a brand-new understanding of tire manufacturing and Aeolus Tyre with a one-on-one dialogue on a "10-billion-yuan Aeolus, high-tech Aeolus, green Aeolus and people's Aeolus". The company is more committed than ever to sustainable, harmonious development after hearing to the public's voice. This open-to-the-public day is an old PR practice that has long been used by prominent companies around the world, with the aim of fulfilling their social responsibility and giving the general public a closer look at the organization. However, only a few Chinese companies have made such an effort, so this particular opening was an innovative practice by Aeolus Tyre, and a rewarding one, as part of its effort to build its corporate image and accelerate its business transformation.

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ISSUE 56 EVENTS

The list of prominent Chinese businesswomen for 2011 was unveiled in Beijing on April 15, with the head of the Chemical Industry's Zhonghao Chenguang Research Institute joining the

list, the only person from ChemChina to receive the title in 2011. The recommendation came from the State-owned Assets Supervision and Administration Commission.

Li Jia Named Chinese Businesswoman of 2011

Haohua Honghe Named Most Trusted Company in

Sichuan for the 21st TimeWu Ling, Wen Jiadi

Honghe Chemical was recently named the most trusted company in Sichuan province by the Provincial Administration

for Industry and Commerce. This is the 21st time in a row that Honghe has captured this honor since 1990. The company has operated in strict accordance with laws and contract provisions and has set up a legal affairs office with a full-time counselor specifically to attend to responsibilities and to supervise contract affairs. Anything concerning the Contract Law or other laws involving managers and employees is scrutinized. The company defines the review and supervision responsibilities for contract and has revised its Contract Management Policy to fit operational needs. Indeed, close compliance with the law has earned the company a good reputation and helped it avoid contract disputes and protect the rights and interests of the company. Last year, the company completed nearly 3 billion yuan worth of business involving 2,431 contracts.

Zhonghao ChenguangNamed Home of Model

WorkersWang Yude

The general labor union of the city of Z igong, S ichuan province, recently

presented a "Home to model workers" certificate accompanied by a medal to Zhonghao Chenguang Research Institute of Chemical Industry on behalf of the All China Federation of Labor Unions.

Over the past several years, Zhonghao Chenguang has worked constantly to make itself a home for all of its employees. It has built a home for democracy, development, and care by improving its democratic management and focusing on business development and helping employees who are in need.

HP Experts Visit ChemChina Petrochemical (Tianjin)

Three management experts from HP College paid a visit to ChemChina Petrochemical (Tianjin), March 16-17, to learn more about the company's WCM program. The three did a fast

tour of the factory for some observation and assessment and spoke with the general manager of the company. They also got a look at the procurement and supply management, reviewed the strategic objectives, and did some financial analysis, after which they provided some opinions on how to continue improving the company. Photo by Mao Xueqiang

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ISSUE 56 EVENTS

Bluestar Machinery Completes In-situ Renovation

Tang Anshu

Sichuan Bluestar Machinery Co, Ltd's technical renovation project was officially completed on April 18 and the plant was able to resume operation. This signaled the end of all of its

post-disaster reconstruction that began after the 2008 Wenchuan earthquake, causing an unbelievable amount of damage to the company. In the immediate aftermath of the quake, the company started making plans and drew up a feasibility study for reconstruction both in-situ and offsite. By August 2010, the company had completed most of the more urgent offsite work, and, a month later, an in-situ technical renovation project began at Shifang, the epicenter of the earthquake. The 50 million-yuan project finally got the plant back to operation by April 18 this year. The plant now has an integrated processing and assembly line for 12,000 units of heavy-duty and high-velocity railway switches and frogs. It can produce single 18-ton castings, single 30-ton forged parts, 15-ton VOD steel ingots, and 15-ton electro slag ingots, as well as high-quality alloy steel, ultra-low-carbon stainless steel, low-temperature steel materials, high-quality specialty forging stock, and high-quality wrought products. The changes to the plant will facilitate product mix restructuring. Sales this year are expected to exceed 100 million yuan, and 500 million yuan by the end of the 12th Five-Year Plan. Bluestar Machinery is currently negotiating with the Sichuan Institute of Special Inspection on introducing a tanker inspection center and tanker production line, to build the subsidiary into a true railway manufacturing center for greater social and economic development in Deyang.

Bluestar Dongda Cooperates with Qingdao University in Training

SeminarZhao Minghua, Du Chan

A chemical engineering master's degree training seminar organized by Bluestar Dongda and the Qingdao University of Technology started on April 13, with 30 students for the initial

session. They were chosen through a national exam and a rigorous selection process and will follow a two-year program of prescribed courses followed by an exam in strict compliance with academic requirements before getting a degree. Qingdao University of Technology is a prestigious university in Shandong province and the company intends to establish a strategic partnership with it for mutual benefits and resource sharing. Some of the company's more outstanding employees will be able to continue their education through the program.

Shenghua Pioneering in Comprehensive Resource

Utilization for HebeiWang Jianjun

The Hebei provincial Department of Industry and Information Technology

recently published its list of the first complexes and enterprises for a pilot project for comprehensive resource utilization. The Hebei Shenghua Recycling Economy Chlorine Alkali and Fluorine Chemical Plant is the only company of its kind in the city of Zhangjiakou to make to the list, which contained five complexes

and 13 companies. The pilot period will run for three years, during which time the complexes or companies that can demonstrate successful implementation, technical innovation, and cost-effective resource utilization will get a province-level designation.

A 170-inch hydraulic curing press from the Guilin Rubber Machinery

Co passed the European customer's acceptance check on April 13, and was shipped. When Guilin Rubber first received the purchase order, it immediately set up a task force to coordinate the production, assembly, and technical processes, the supply issues, and quality assurance to ensure prompt product delivery in the shortest possible time and most efficient way. Photo by Li Li

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ISSUE 56 CONTINUOUS IMPROVEMENT

Continuous Improvement Across ChemChina

Fo r t h e p a s t f e w y e a r s , C h e m C h i n a

h a s a c t i v e l y p u r s u e d a g o - g l o b a l

strategy and has increased its efforts to

continuously improve and develop world-

class manufacturing. Currently, all ChemChina

companies are active in this, with a view toward

improving operations and management, and

controlling costs.

China National Chemical Equipment Corp (CNCE) held a six sigma continuous improvement black belt review meeting at Hunan Yiyang Rubber & Plastics Machinery, on March 29. It covered eight black belt projects and 30 green belt projects implemented by a dozen ChemChina companies, including Hunan Yiyang Rubber & Plastics Machinery and Guilin Rubber Machinery and Bluestar Machinery.

Participants taking an oath at a launch ceremony for

a lean manufacturing project at Double Happiness

Tire on March 30.

Shenyang Paraffin Chemical has 28 certif ied team members who are applying new, continuous improvement skills on the job. Photo shows Sinclair experts getting feedback from employees on BWCM implementation and their understanding of the four roles.

Haohua Honghe is now selecting continuous

improvement projects. Photo shows a WCM/CI

awareness-raising meeting the company held.

Recently, 14 green belt projects and two black belt projects, initiated in 2011 at the Xinghuo Plant passed the closing review. That brings the total number of certified projects at the plant to 27. They generate annual revenues of about 17.5 million yuan. Photo is of the closing review.

May 2012 Newsletter

NewsletterISSUE 56 CORPORATE SAFETY CULTURE

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Work Safety in SpringAll of ChemChina's companies have recently been

looking for ways to avoid industrial accidents, by taking a closer look at each company's own particular circumstances.

Shenyang Chemical has asked all employees to keep an eye open for any possible safety hazards, as spring and its especially windy, dry weather arrives, to prepare for full-load operations at the plant. Meanwhile, Shenyang Paraffin Chemical has been meticulous in picking out blind spots and inaccessible parts of its pipelines, looking for any hazardous objects that could fall on people, and checking the firefighting system to eliminate potential safety hazards before it's too late. Changyi Petrochemical has done a safety inspection of

its plants and has put warning signs near high-temperature, high-pressure areas, while checking all fire equipment in the factory, thoroughly cleaning out trenches, ducts, and conduits in the plant, and eliminating possible safety hazards. Bluestar Beijing examined the equipment status and worked to prevent accidents to ensure normal production and operations. Bluestar Yima invited local firefighters to inform corporate fire safety personnel about the correct use of respirators, fire- and chemical-resistant clothing, dry-powder fire extinguishers, and fire hoses. Huaxing Petrochemical got all of its employees involved in a 100-day safety campaign, which incorporated a new safety risk deposit concept in addition to the already-established reward-punishment system based on safety performance.

Workers a t Opera t i on D iv i s ion 1, Changyi Petrochemical apply corrosion-resistant coat ing to a 1-million-t/a atmospheric and vacuum distillation unit.

Workers at Shenyang Paraffin Chemical's catalysis factory examine equipment for potential safety hazards.

Shenyang Chemical's employees scout for potential safety hazards.

Bluestar Beijing's electrode workshop safety officers take a careful look at the displays and data of instrument.

Yima firefighters give company firefighters instructions on the correct use of positive-pressure air respirators.

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ISSUE 56 CORPORATE SAFETY CULTURE

Huaxing Petrochemical:A Family Letter Encourages Safer

Performance.

Huaxing Petrochemical held a 100-day safety campaign, and instead of giving warnings or putting

up safety banners, it invited parents, spouses, and children of its employees to write letters about safety, then on April 10, invited family members of production department personnel to come and read the letters on safety to remind everyone of the need for work safety. It also filmed employees at home and at work and played the video back for the production crew. This homey reminder has made employees much more safety-minded.

Haohua Yuhang: Seeks Safety for the Family's Sake

As p a r t o f i t s effort to create

m o r e s a f e t y -conscious families of its employees, H a o h u a Yu y a n g p u t u p b u l l e t i n boards near high-risk work areas to

Xinghuo Plant: Says 'Safety Foremost'The Xinghuo Silicone Plant held an at-

home safety culture event with the theme, "Safety Foremost" as a practical action plan. It contained many measures and was designed to deal with actual company conditions in the following ways: a mobilization meeting; a family tour of the SHE educational center and the factory history exhibition; lectures on traffic safety and the safe use of gas and electricity at home; training in first aid at home; an at-home safety evening gala; the selection of outstanding safe campers for the Bluestar

provide safety reminders from workers' families. It also prepared safety-related CD-ROMs and manuals for employees to encourage them to develop an at-home safety culture. Photo by Shua Xuxiang, Fu Haiping

summer camp; and public speaking and a quiz on at-home safety. These events helped demonstrate the factory's commitment to an at-home safety culture and safety in every corner of the factory, and to the healthy development of the factory where all employees and their families live in peace and contentment. The Xinghuo Plant drew up 26 wintertime traffic safety tips and printed out copies which were handed out to bus drivers, employees and people with

cars as a traffic safety reminder for rush hour.

Bluestar Ruicheng: Finds Practical Ways to Build a Safety

Culture at HomeBluestar Ruicheng took

some practical steps in its effort to develop a n a t - h o m e s a f e t y culture. It checked on licenses for employees with cars and helmets for those with motorcycles, and did a supervisory and

performance rating by the SHE department. The photo shows motorcycle helmets being handed out to employees with motorcycles to ensure their personal safety. Photo by Lei Zengping

Guangxi Dahua: Looks for at-home Safety For a

Harmonious SocietyGuangxi Dahua got all of

its employees involved in an at-home safety pledge on March 21, the company's 46th anniversary. It held several events to support at-home safety and work safety across the company, and

showed its support for overall safe and scientific development. Photo by Qiu Zi.

Safety Culture at Home