8WWW.CEN-ONLINE.ORG APRIL 12, 2010

NEWS OF THE WEEK

SHINTECH, the U.S. polyvinyl chloride arm of Japan’s Shin-Etsu, will spend $1.1 billion to build plants for the PVC raw materials vinyl chloride

and chlorine at a site in Plaquemine, La. The company says it has already begun construction

of a complex that will have annual capacity of about 800,000 metric tons of vinyl chloride, 485,000 metric tons of chlorine, and 530,000 metric tons of chlorine coproduct caustic soda. The company expects to com-plete the project by the end of 2011.

In recent years, companies have shied away from making capital investments in basic chemicals in the U.S., but Shintech has been an exception. Later this year, the company expects to complete another $1 bil-lion round of investments in Plaquemine that will add chlor-alkali and vinyl chloride facilities and a 600,000-metric-ton-per-year PVC plant. With the two projects, Shintech will have more than enough vinyl chloride capacity to supply its PVC plants in Louisiana.

The investments also suggest that the relationship between Shintech and Dow Chemical in Louisiana is coming to an end. Dow has supplied vinyl chloride to Shintech’s 1.5 million-metric-ton-per-year PVC com-plex in Freeport, Texas, for more than 35 years. And in the late 1990s, Shintech aimed to build a fully inte-grated chlorovinyls complex in Convent, La., but was stymied by a public uproar. Dow stepped in and offered to supply vinyl chloride to Shintech for a scaled-down project consisting of only a PVC plant in Plaquemine.

Shintech’s move comes at a time when Dow is dis-tancing itself from basic chemicals and is losing its appetite for such supply deals. In a recent conference call with analysts, Dow CEO Andrew N. Liveris implied that Dow’s supply contract with Shintech in Louisiana would be ending in 2011. Liveris went on to say he is planning to eventually make chlorine part of Dow’s “asset light” strategy, referring to the firm’s practice of forming joint ventures for capital-intensive, basic chemicals businesses.

Relationships aside, the prospects for Shintech’s in-vestments are good, says Nick Vafiadis, business director of polyethylene and polyvinyl chloride at the Houston-based consulting firm Chemical Market Associates Inc. He explains that the PVC industry is putting its worst pe-riod behind it. In addition, with ethylene and electricity costs low because of cheap natural gas, U.S. chlorovinyls production has a global edge, Vafiadis says. —ALEX TULLO

THE ADMINISTRATION announced last week that it would reduce the number of ready-to-launch nuclear weapons in the U.S. by 30% over the next

seven years, limit the actions that could trigger a U.S. nuclear attack, and raise the threshold for con-struction or testing of new nuclear weapons.

The announcements were part of the April 6 release of the U.S. Nuclear Posture Review (NPR), an internal government assess-ment document outlining the nation’s nuclear weapons strategy, and the April 8 signing of the international Strategic Arms Reduction Treaty (START) by U.S. President Barack Obama and Russian President Dmitry Medvedev.

The START agreement would cut deployed strategic nuclear weapons from 2,200 each for the U.S. and Russia to 1,550. It does not, however, address tactical nuclear weapons that number in the thousands, some of which

are several times larger than those dropped by the U.S. in Japan during World War II.

When announcing the NPR, Secretary of Defense Robert Gates stressed that the U.S. would maintain its stockpile of nuclear weapons by relying on reuse or refurbishment of existing components. Any actual replacement of nuclear components would require specific presidential approval.

Gates noted that refurbishment would require a “much-needed investment” in the Department of En-ergy’s weapons labs, and he promised to transfer some $5 billion from the Department of Defense budget to DOE for a modernization program.

Energy Secretary Steven Chu also underscored at the NPR’s release the need to modernize the labs, pointing to Obama’s budget, which proposes a 13.4% increase in weapons lab funding. He said the increase would lead to better weapons security and in the long term would allow the nation to reduce the stockpile of nondeployed warheads it keeps as a “technical hedge.”

Arms control organizations generally applauded the announcements, but many said they hoped for deeper cuts in light of Obama’s campaign pledge to pursue a world without nuclear weapons.

The Alliance for Nuclear Accountability, an orga-nization of groups located near the labs, noted that DOE’s nuclear weapons budget proposal is the largest ever and warned that it may encourage the U.S. to build new nuclear weapons in the future. —JEFF JOHNSON

Gates (right), and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, at a press conference on the U.S. Nuclear Posture Review on April 6 at the Pentagon.

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Pipe is a major market for PVC.

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SHINTECH INVESTS IN LOUISIANA

BASIC CHEMICALS: Company will integrate its PVC business in the state

NEW U.S. NUCLEAR WEAPONS POLICY ARMS REDUCTION: Administration

pledges limits on numbers, use, construction of new weapons