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SDK Allowed to Run Ethylene Plant for Four Consecutive Years

February 12, 2004

Showa Denko K.K. (SDK) has obtained Economy, Trade and Industry Minister’s approval to lengthen the intervals between scheduled shutdowns of its ethylene plant at the Oita Petrochemical Complex from two to four years.

SDK is already allowed to inspect safety of its ethylene plant by itself under the High-pressure Gas Safety Law. This is because SDK is recognized as controlling the operation and maintenance of the plant in a highly reliable manner and implementing proper safety/disaster-prevention measures. As a result of the approval given this time, SDK now expects the next scheduled shutdown of the ethylene plant to take place in 2006.

In September 2000, SDK strategically reduced its ethylene production capacity to approximately 600,000 tons a year with one train. (The actual capacity as of the end of 2003: 581,000 tons in the year of scheduled shutdown and 653,000 tons in other years, averaging at 635,000 tons a year.) Since then, the ethylene plant has maintained high capacity utilization.

At the same time, SDK has worked to reduce costs and improve competitiveness by saving energy, diversifying raw materials and introducing a system to optimize the plant operation. The permit to lengthen the intervals between scheduled shutdowns will further increase the competitiveness of the plant.

Since its ethylene plant does not require additional equipment for the use of gas oil, SDK will start using gas oil in significant quantities to further diversify raw materials for ethylene production. The Japanese Government is expected to lift the duty on gas oil as from fiscal 2004. SDK has developed new software jointly with Toyohashi University of Technology to ensure that diversified raw materials are fed into a plant under optimum conditions. This software will be introduced at Oita ethylene plant in the summer of this year.

Under the ongoing medium-term consolidated business plan called the “Sprout Project,” SDK is aiming to strengthen the competitiveness of its petrochemicals business.

SDK is committed to ensuring the internationally competitive position of the Oita Petrochemicals Complex. Thus, SDK will continue implementing various measures not only for the ethylene production but also for the organic chemicals business, which includes acetic acid and ethyl acetate operations.