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2007-05-24 News Release

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LANXESS Plastics Growth in China

Asia strategy reinforced for LANXESS growth and innovation in China with production capacity for high-tech plastics to double.

A year after the start of the Group-wide initiative "LANXESS goes Asia", the company is driving growth and innovation in China further forward. In Wuxi, near Shanghai, the LANXESS Semi-Crystalline Products business unit has opened a development center for high-tech plastics. The business unit will bring a second production line at this site into operation in the fourth quarter of 2007, thereby doubling production capacity, as it had announced in spring last year.

As early as summer 2007, a manufacturing line exclusively for specialties and customer samples will start up in Wuxi. In Qingdao in the province of Shandong, LANXESS’s Technical Rubber Products business unit plans to set up a rubber research center. Furthermore, among others, LANXESS is currently analyzing the Chinese locations of Nanjing and Ningbo as candidates for the international competition launched in March to find a suitable location for a new facility in Asia for producing ion exchange resins. The planned investment by LANXESS’ s Ion Exchange Resins business unit lies in the eight-figure Euro range.

"China continues to be our biggest growth driver in Asia," says Axel C. Heitmann, Chairman of the LANXESS Board of Management. "The increase in our production capacity and the strengthening of research and development in China means that we are even better equipped to meet the demands of the Asian markets and are able to secure further competitive advantages for ourselves through innovative solutions."

LANXESS Research and Development Center in Wuxi, China. Click Here for High resolution image. photo: LANXESS

High-tech plastics for booming automotive and electrical industries

With its second production line in Wuxi, LANXESS’s Semi-Crystalline Products business unit is doubling the capacity of its state-of-the-art compounding plant for the engineering plastics Durethan and Pocan, which only commenced operation last year, to over 40,000 metric tons.

The total volume of the investment in Wuxi that began last year amounts to around EUR 20 million. "This investment underlines our clear strategy to focus on profitable growth," says Heitmann. The market for engineering plastics is currently growing by eight percent in Asia and more than 10 percent in China. Double-digit growth rates are expected to continue in the automotive and electrical sectors in particular. "With the commissioning of our second production line, we are one major step closer to our goal of increasing global sales of our high-performance polymers Durethan and Pocan by 50 percent in the next five years," continues Heitmann. By implementing the individual expansion phases, LANXESS is doubling its workforce in Wuxi.

China is becoming increasingly important as a technology location

Together with its customers, LANXESS is developing new solutions in terms of materials, applications and technologies. The Semi-Crystalline Products business unit’s new Testing Center in Wuxi will speed up the development of new polyamide and polyester grades and is one of the largest and most modern centers of its type in China. The new production line for specialties and customer samples will be used exclusively for individually tailored solutions. "This way we can occupy a high-quality market segment outside the mass market," says Hubert Fink, head of the Semi-Crystalline Products business unit.

The objective of the new research facility for rubber at Qingdao is to develop new products and applications as well as enhancing existing products from the Technical Rubber Products business unit. Qingdao is a particularly suitable location for a research center as a large proportion of the Chinese polymer industry's up-and-coming scientific community are educated at the university there. Furthermore, 60 percent of the Chinese rubber industry is located in the area surrounding this city of seven million people.

Subsidiary Rhein Chemie of the chemicals group LANXESS is building a new plant for the manufacture of lubricant additives in Qingdao, China. In Qingdao Rhein Chemie has been producing rubber chemicals since 1999 within a joint venture. Capacity of polymer-bound chemicals (Rhenogran*) was doubled last year with the commissioning of a second production unit. LANXESS currently employs more than 800 staff in China, of which 160 work for Rhein Chemie in Qingdao.

Since 2005, the business unit has also operated a technology center for the further development of technical rubbers in Shanghai. LANXESS also runs the largest research and development center for leather products in Asia in Wuxi. "China is becoming more and more important to us as a technology location," says Heitmann.

"LANXESS goes Asia" initiative continued

The Asia-Pacific region is crucially important to LANXESS. With an increase in sales to EUR 1.23 billion, the proportion of Group sales from Asia rose to almost 18 percent in 2006. The Chinese and Indian markets, where the increase in sales lay in the double-digit range, are major growth drivers.

Within the framework of the "LANXESS goes Asia" strategy launched in April last year, the Leverkusen-based chemicals group commissioned three new sites in China in 2006 alone. In addition, a production facility for the manufacture of raw pigments commenced operations in April of this year.

With the investment, first announced in February, and the international competition to find a suitable location for a new ion exchange facility, which was launched in March and in which sites in China, India and Singapore are taking part, LANXESS wishes to keep its site costs as low as possible from the outset. The new facility will represent the biggest investment by the Ion Exchange Resins business unit since the end of the 1990s and will make an important contribution to industrial water treatment.

In order to further advance its expansion plans in Asia, LANXESS aims to employ up to 1,000 new employees in Asia by 2009, around two thirds of whom will be in China. LANXESS currently employs almost 2,100 people in Asia and over 830 in China. This means that the number of employees in China has risen by 30 percent in one year.

For more information on the LANXESS Asia strategy, click on: (www.lanxess-goes-asia.com)

LANXESS is one of the leading European chemicals suppliers, with 2006 sales of EUR 6.94 billion and approximately 16,500 employees in 18 countries. The company is represented at around 50 sites worldwide. The core business of LANXESS is the development, manufacture and sale of chemicals, rubber and plastics.

Read a recent press release about - The aim of the Polybutadiene Rubber business unit of LANXESS is to speed up development of new products to bring them to market earlier.

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