November 2011

ISSUE 50November

All-China Women's Health Tour Comes to Changyi PetrochemicalHonghe Chemical Speech ContestSidelights of Woman Balloon Volleyball Final 2011

Ren Jianxin Meets with Former German ChancellorChemChina's MAI AcquisitionChina's Largest Membrane Desalination Project

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Good News from Qingping Phosphate MineNanjing 7425 Factory Makes Progress on a Key ProjectD a q i n g B r a n c h M T B E E x p a n s i o n a n d Reconstruction ProjectSichuan Bluestar Machinery PTA Steam Pipe Rotating Dryer

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Italian Experts Examine Zhonghao Chenguang Institute's CDM projectDouble Happiness Tire Passes Safety Facility Checkup in ShanxiYuxing Chemical Upgrades Conventional Titanium White Production Process

Aeolus Tyre Wins Henan Governor's Quality AwardWang Feng Becomes China's Leading Quality PractitionerBSI Expert Jean Francois Receives Lushan Friendship Award

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Qenos Signs Long-term Feedstock AgreementCNCE Structured for Integrated Rubber MachineryChemChina Oil & Gas Centralized Management Synergy

Memorable Military-style TrainingMy English Teacher

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Employee World

HDCWTT Develops Integrated Water System DeviceChemChina's 2011 MCP TrainingCompletion of ChemChina Oil & Gas ERP Project Design

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Project

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Children of ChemChina

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Awards & Honor

Events

November 2011

ISSUE 50 EVENTS

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Ren Jianxin Meets with Former German Chancellor

ChemChina President Ren Jianxin met with Gerhard Schroeder, Senior Advisor of Rothschild Investment Bank and Germany's former chancellor, and Klaus Mangold, Chairman of Supervisory and Advisory

Boards of Rothschild and other members from Rothschild at ChemChina Headquarters on October 12.

After welcoming the delegation, Ren gave an outline of ChemChina's business interests and achievements, especially as concerns its development in Europe. Schroeder spoke approvingly of ChemChina on its success in recent years and said that he looks forward to its continued development and cooperation with Europe.

ChemChina's MAI Acquisition

The China National Agrochemical Corporation, ChemChina's agrochemical business completed its acquisition of a 60% stake

in Israel's Makhteshim Agan Industries (MAI) on October 17. The remaining 40% is held by Israeli Koor Industries Ltd, a member of the IDB Group, formerly MAI's largest shareholder. MAI, which is a publicly traded company with a 66-year history, has its headquarters in Tel Aviv, Israel. It is the world's seventh largest producer of pesticides, with products that include herbicides, pesticides, bactericides, and plant growth regulators. It can produce more than 120 varieties of generic drugs and has almost 5,000 registered products and over 6,000 trademarks in various countries around the globe. In 2010, it had $2.362 billion in sales. The company's total equity is $2.4 billion. This acquisition amounted to $1.44 billion. The acquisition was approved by the governments of both countries and passed anti-trust reviews in the United States, Brazil, and the European Union. China's Export-Import Bank, the Bank of China and the China Construction Bank provide financing and international payment services for the project. Commenting on the project, Ren Jianxin said, "We share a common cause and vision and have the ability to strengthen our business. We're dedicated to providing advanced technologies and solutions that will allow for the distribution of more and safer food among the global population. MAI's leading technologies, sound marketing, and excellent management and work teams in the agrochemical business will have a positive effect on the enterprise." Intermediaries and advisors for the project include the Compass Advisers Group, PWC, Simpson Thatcher & Bartlett, Israel's GKH Law Offices, the ERM Group, and McKinsey.

China's Largest Membrane Desalination Project

By Cai Jie

The Caofeidian membrane desalination project, which has a daily production capacity of 50,000

tons, began operation on Oct 10 as the largest domestic membrane desalination project. It is a key desalination demonstration project for the National Development and Reform Commission and was built by the Hangzhou Development Center of Water Treatment Technology (HDCWTT). This project shows that ChemChina's desalination technology has reached the highest international level.

Funding for the project comes from the Caofeidian Infrastructure Construction and Investment Co and Norway's Aqualyng (China) Co., Ltd. The project covers 2.13 hectares with a construction area of 13,000 square meters. It draws sea water from Bohai Sea and provides municipal drinking water from desalinated seawater. ChemChina has China's largest industrial-scale and strongest desalination technology. HDCWTT is one of China's first institutes to engage in membrane desalination research and has been a leader in membrane desalination technology, holding a Chinese market share of more than 70%.

November 2011 2

ISSUE 50 EVENTS

Qenos Signs Long-term Feedstock Agreement

Qenos announced its new long-term feedstock contracts with ExxonMobil Australia and BHP Billiton at an official ceremony held in Beijing on Sept 27, 2011.

Hosted by Mr Ren Jianxin, President of China National Chemical Corporation (“ChemChina”), the signing ceremony at the Diaoyutai State Guesthouse was attended by senior representatives of Qenos, ExxonMobil Australia and BHP Billiton as well as the Victorian Premier, Mr Ted Baillieu. Qenos, ExxonMobil Australia and BHP Billiton, with support from the government of Victoria and ChemChina, Qenos' major shareholder, have entered into long-term supply agreements allowing the use of oil and gas resources in the Bass Strait to produce polyethylene, which is used by Australia's manufacturers for high-value goods. The signing ceremony honored the 15-year feedstock supply agreements that Qenos, ExxonMobil Australia, and BHP Billiton had reached, which will help the $195-million expansion project and continued operation of the Qenos Altona Victoria polyethylene manufacturing project. "ChemChina's support for the growth of Qenos as evidenced

by today's signing shows the great progress made by Qenos in creating a sustainable future," Ren Jianxin concluded. Qenos' CEO, Jonathan Clancy, explained, "The contracts will secure a 15-year supply of feedstock worth more than $2 billlion. We add significant value to ethane and LPG by producing polyethylene, which is then used to develop a range of high-quality plastic products, both domestically and for export." The feedstock contracts underpin the investment in expanding and modernizing the manufacturing facilities at Altona, in Melbourne and "are a significant investment in Victoria's economy and will secure jobs at the Qenos Altona Plant, and create 250 additional jobs during the $195 million expansion of the plant," Baillieu said. "This project will increase Altona's manufacturing capacity by 20 per cent, ensuring that it remains competitive in the global market. For our valued customers, this significant investment will provide benefits through increased reliability of supply, coupled with our ability to increase capacity in line with the growth of the Australian polyethylene market, and provide a sound base for future growth," Clancy added.

CNCE Structured for Integrated Rubber Machinery

By Li Li

China National Chemical Equipment Corp (CNCE) recently established an organizational structure for its integrated rubber machinery division,

which will allow CNCE to directly operate its third-level companies. The company's rubber machinery division wants to become the world's leading manufacturer of rubber machinery in line with China's "Twelfth Five-year Plan" based on its large scale, effective operation, major brands, and advanced technology. The division consists of a General Management Department, Product R&D Center, Sales Department, and Production Management Department. The third-level companies will serve as a base mainly for production, storage, technology, and administration. The Production Management Dept's function is production planning, process management, safety management, environmental protection, and quality inspection. The Administrative Office's function is accounting, HR, procurement and information management. The other departments function as agencies for related headquarters departments. The integration of the rubber machinery division will take shape in 2011. In 2012 the focus will be the optimization of functions, increased cooperation, and the setting up of three legal entities and one business division. By 2013, there will be integrated operation, preparations for listing, and one business division and three production bases.

ChemChina Oil & Gas Centralized Management Synergy

By Liu Guoguang

Since the beginning of this year, ChemChina Oil & Gas Corp has tried to promote centralized management and help management make the transition from a strategic

control model to an operational control model. This will allow the company to benefit better from its advantages in human resources, technology, capital, and information, to achieve a common understanding of management concepts, strengthen management, and have better performance. In this way, the company will derive a certain synergy from its centralized management.

In the first half of this year, ChemChina Oil & Gas applied centralized corporate management practices to Huaxing Petrochemical, Changyi Petrochemical, Qingdao Anpon, and Penglai Anpon. By the end of April, the centralized management had been applied at all subsidiaries. To strengthen centralized management, ChemChina Oil & Gas studied centralized management methods and sent representatives to subsidiaries to make full use of its human resources, technology, capital, and information advantages. The company currently has a strategic procurement committee, well-centralized procurement management practices, and the rational use of its crude oil procurement processes. By June, 37 percent of the company's procurement had been centralized and it had implemented a daily inventory reporting system to review and coordinate production and share business information so that the distribution of raw materials and products becomes more rational.

November 2011 3

ISSUE 50 EVENTS

HDCWTT Develops Integrated Water System Device

By Zhang Jianzhong

Ha n g z h o u Deve lopment Center of Water

Treatment Technology (HDCWTT) and Zhejiang Wate r Con se r vancy Technology Promotion Center have developed a "sea island integrated water system device" which uses HDCWTT's patented products, such as the energy recycling d e v i c e , h y d r a u l i c recycling purification

unit, and electro-bacteriostasis device, to reduce energy consumption significantly and generate improved bacteriostatic and turbidity-reducing effects without adding normal bactericides, thus convenient and pollution-free. After a review process, the "research and promotion on sea island integrated water system device" was awarded third prize at the "Zhejiang Water Conservancy Technological Innovation" awards for 2011" by the Zhejiang Provincial Water Resources Department. This device features low cost, small size, automation, and convenience to operate and manage. It is particularly suited for use on small islands, among scattered villages along the coast, as well as coastal enterprises and public institutions.

ChemChina's

The ChemChina Master Control Policy Office held its last captive insurance training session for this year on Sept 29 in the city of Zigong, Sichuan

Province, marking the full completion of the ChemChina captive insurance training program for 2011. To push ChemChina's captive insurance work in 2011, and to improve understanding of the program and help all of the Group's staff get involved in the captive insurance program, the MCP Office developed a training program during the signing of captive insurance service agreements at the beginning of the year, and

2011 MCP Training

Completion of ChemChina Oil & Gas ERP Project

DesignBy Wu Peng

ChemChina Oil & Gas Corp held a blueprint design review for its ERP project a few days ago, where it explained the

progress and overall blueprint design of the ERP project. The leaders of six different module groups explained the blueprints of their own modules and how they differed from the global templates. Department leaders said during the conference that the ChemChina Oil & Gas ERP project demonstrated business principles very

well during the implementation of the project, and that the company always maintained a careful, open and inclusive work attitude. They also pointed to some noteworthy issues in the blueprint phase, and reminded the team of the need to pay particular attention to data conversion and overall testing, risk management, user training, and incentives for the project team during the next phase. This conference proved that the project blueprint and design was complete, and that the project had entered the "system implementation" phase.

asked experts from the Willis Insurance Brokers Co., Ltd and the Chinese insurance companies (CPIC, PingAn, and the China

Life Property & Casualty Insurance Co., Ltd) to train the Group's insurance personnel. The experts gave a detailed explanation of the objectives of ChemChina's captive insurance policies, risk management, and prevention in the chemical industry and the processing of insurance claims. After the training, the MCP Office completed all the key training in the six enterprises as per the Captive Insurance Service Agreement.

November 2011 4

ISSUE 50 PROJECT

Good News from Qingping Phosphate Mine

By Yan Hong, Liu Wenwen

Good news came from the Qingping Phosphate Mine on Sept 23 that they had moved their office again. In the three years since the earthquake hit, the mine has moved its office three times. But, this time it was different -- they have a real home, with the head office on Sumian Avenue, in the city of Mianzhu. The building completion marks the completion of reconstruction work of the mine after the earthquake. And there was another piece of good news: construction work on a 200,000 ton ammonium phosphate (AP) plant for the Qingping Phosphate Mine began in the Mianzhu Gongxing Industrial Park on Sept 17. The project is a key reconstruction project after the earthquake, and is actually a dream of the company, which is on the road to integrating mining and chemicals.

Nanjing 7425 Factory Makes Progress on a Key

ProjectBy Lu Shiming

The Chonche Group Nanjing Factory 7425 and TRI signed a confidential agreement on Oct. 11,

indicating the official beginning of the Production Line of 4mn Meters of Wire Reinforced Hydraulic Rubber Hose and Hose Assemblies, a key project of Nanjing Factory 7425 under the "Twelfth Five-year Plan". TRI has world-class technologies and sophisticated management in the design and manufacture of hydraulic hose, and Factory 7425 has unique advantages in marketing and materials cost controls. The cooperation between the two will ensure a high starting point, high efficiency, and high performance. It is expected that the project will bring 250 million yuan in revenues and 38 million yuan in profits each year, which will significantly help the factory in its innovative, rapid development.

By Xing Jiwei, Chen Fucai

The 80,000 ton MTBE expansion and reconstruction project of ChemChina Oil & Gas Corp Daqing branch was completed and went into trial

production on Sept 27. The products produced on Sept 29 showed that the project was successful after only one trail run. The construction work began in June 2011, the equipment was installed during a maintenance period, and the project was completed as scheduled at the end of September. This project will bring economic benefits of 15 million yuan each year.

Sichuan Bluestar Machinery PTA Steam Pipe Rotating Dryer

Tang Anshu

A 400,000 t/a PTA steam pipe rotating dryer made by Sichuan Bluestar Machinery Co, Ltd was shipped from

the factory on Sept 17. The dryer, which is 2.88 meters in diameter, 25 meters long, and weighs 120 tons, is the first large PTA steam pipe rotating dryer manufactured by Bluestar Machinery since the company's relocation to Deyang in Aug 2010. This equipment is a key component of PTA facility and has promising market prospects. There are only a few companies in the world capable of designing and manufacturing such equipment. This marks a substantial step for Bluestar Machinery in its move to upgrade its product mix.

Daqing Branch MTBE Expansion and Reconstruction Project

November 2011 5

ISSUE 50 PROJECT

Italian Experts Examine Zhonghao Chenguang Institute's CDM project

Chen Gang

A DOE international inspection team of five Enel (Italian national power company) experts examined the clean development mechanism

project of Zhonghao Chenguang Research Institute of Chemical Industry on Sept 28. The team inspected the written data submitted by the institute and checked whether the project monitoring system was in place and fully functional. The picture shows the inspection team doing a field survey at the production site.

Double Happiness Tire Passes Safety Facility Checkup in ShanxiLi Weiling

A panel of experts organized by the Shanxi Provincial Bureau of Work Safety on Sept 30, after examining the Double Happiness Tire safety facilities for a

600,000 piece/a all-steel heavy-duty radial tire plant, and a 1.2 million piece/a all-steel heavy-duty radial tire plant, gave the nod to the safety facilities at the two plants, saying they were well-managed and met all national safety standards.

Yuxing Chemical Upgrades Conventional Titanium White Production Process

Chu Yuhui, Wang Yanjing

In the conventional titanium white production process, dedusting of equipment is an endless task. Now a new pulverization process developed by workers at the

titanium white workshop No. 3 of Jinan Yuxing Chemical Co, Ltd not only completely removes the dedusting blower fan and impulse that has been used for years and cuts annual cost of the entire titanium white production line by nearly 1 million yuan, more importantly it radically updates the titanium production's operational concept. The continuous improvement approach provides a place where all employees can demonstrate their creativity. One equipment operator, Li Ming, who was just recently transferred from the chromate salt system,

suggested the possibility of removing the 45kW deduster, based on his many years of chromate salt production experience, just after having learned about the titanium white production process. The company soon got all personnel to study the feasibility of the proposal and the workshop listed this project as a winning project after Li explained in detail the steps for improvement. In early May, the improvement project was started and successfully completed soon afterwards. Currently, this improvement is being duplicated in Lines A and B of the 100,000t/a titanium white plant, and total savings of nearly 1 million yuan per year is expected after the factory-wide retrofit is completed.

November 2011 6

ISSUE 50 AWARDS & HONOR

Aeolus Tyre Wins Henan Governor's Quality Award

Xu Li

At a Henan provincial government meeting on Oct 10, a ceremony was held where the governor, Guo

Gengmao, presented the governor's Quality Award to qualified companies, one of which was Aeolus Tyre Co., Ltd. Part of the award was 1 million yuan for outstanding performance in quality management. In trying to achieve world-class manufacturing, and after a lengthy period of improvements, Aeolus Tyre has developed an "Aeolus lean production approach" that focuses on six areas -- quality, cost, efficiency, safety, the environment, and employee ability -- and three tools -- lean production, clean production, and end-to-end material consumption control -- in its production and business management. It wants to build a new Aeolus, one that is clean, energy-saving, safe, environmentally friendly, and high-tech. Currently, the Aeolus tire brand, an entirely local product with the highest percentage of localization in the industry, has its presence in over 140 countries. Overseas, especially in Europe, Aeolus is the No. 1 Chinese tire brand, and a major indicator of Chinese-made all-steel radial truck tire prices on the international market.

Zhang Juan, Yang Yongjun

Wang Feng Becomes China's Leading Quality Practitioner

The 2009-2010 quality honor roll of Chinese organizations, the highest honor in the quality management field, was announced on Sept 20 in Beijing. Aeolus Tyre's general

manager, Wang Feng, was listed on the honor roll. In recent years, as it tries to build a world-class business, Aeolus Tyre has brought in top management approaches and built a leading management system, making it China's first, and currently only, export-inspection-free company in the tire industry.

BSI Expert Jean Francois Receives Lushan Friendship Award

Du Yanqing

A French BSI expert, Jean Francois Gamet, who has been working on an integrated silicone project at the Xinghuo Plant, recently won the Lushan Friendship Award, an

honor that is extended each year by the Jiangxi government to foreign experts for outstanding contributions in the province. Award winners are given a medal, a certificate of honor, and free fitness services by the provincial government. Jean Francois is a senior engineer with BSI in France, and joined the Xinghuo Plant's 200,000 t/a integrated silicone project, in May 2009 as deputy manager. Over the past three years, he has been a technical director in charge of process, instrumentation, and electrical functions. He has played an incomparable role in preparing engineering and technical documents and resolving key engineering and technical

problems, and facing technical challenges, one after another. One example of this was in the basic engineering and technical documentation of the project, which required a 30-million-yuan kneader that had to be sourced. None of the domestic manufacturers could meet the demanding technical requirements for the equipment, and importing one from abroad would mean delays in the project. To deal with this, Jean Francois worked with other technicians and made improvements to the original documentation so that domestic manufacturers could manufacture the needed equipment. This saved the Xinghuo Plant 5 million yuan. Jean Francois pays a lot of attention to cooperating with the local team and actively sets up learning groups and makes foreign knowledge local by training the Xinghuo Plant's technicians. He also learns constantly about Chinese culture, while introducing western culture to the team, promoting the integration of Chinese and western culture at the plant. Jean Francois was recognized as one of the top 10 technologists at the Xinghuo Plant for 2010 at the beginning of this year.

November 2011

ISSUE 50 EMPLOYEE WORLD

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All-China Women's Health Tour Comes to Changyi Petrochemical

Liu Bing

The All-China Pink Ribbon Women's Health Tour recently visited Changyi Petrochemical. It was organized by Changyi as part of the China Pink Ribbon Breast Cancer

Prevention Program, along with the Changyi Petrochemical labor union, under the auspices of the China Pink Ribbon Breast Cancer Prevention Program Foundation's management center.

This event helped enhance Changyi Petrochemical's female Employees' awareness of breast cancer prevention and the need for an annual hospital check-up, and a once-a-month self-examination, as well as daily care. The workstation provided support for the event and was praised by female employees for its free check-ups and free health consultations.

Honghe Chemical Speech ContestWu Ling, Wen Dijia

On the afternoon of October 11, right before the 53rd anniversary of the establishment of Honghe

Chemical, a speech contest was held by the Party affairs department, labor union and the Communist Youth League committee of the company in the multimedia room under the theme of “For the success of Honghe Chemical.” There were 13 participants, whose speeches praised Honghe's staff members and its spirit with considerable passion, and envisioned a bright future for the company. The company recently announced that it had generated 1.6 billion yuan in output in the first nine months and had secured more than 9 million yuan in profits. It also cut its operating losses by as much as 290 million yuan year on year, which inspired its younger workers to try even harder.

Sidelights of Woman Balloon Volleyball Final 2011Mo Yiyong

The women's balloon volleyball final took place recently at the Guilin Rubber Machinery Factory, where the retiree

team faced off against the technical team. Members of the retiree team are all above the age of 50, but they were the best players in various teams before their retirement and have been in constant practice. The technical team is made up of a much younger group of players, and three of them participated in the 2011 Bank of China Cup balloon volleyball tournament. When a sharp whistle was blown to signal the opening of the game, the two teams immediately sprung into action, especially the technical team, with each member -- the first forward, second forward, attack, defense -- moving into position with clarity and precision. The technical team won the first round 21:8, with their overwhelming attack and fewer errors. But, the second round was tense, as the retirees launched a counterattack, guarding the net more effectively, and the two teams exchanged leads. Every moment of the match was wonderful and received loud applause from the audience.

The technical team won the second round with a great deal of effort, and took the match 2:0. But, the retirees went down fighting and we'd like to thank all of the players for giving us a breathtaking game!

November 2011 8

ISSUE 50 CHILDREN OF CHEMCHINA

During the National Day holiday, Bluestar (Beijing) organized a family fruit picking

outing for employees and their families, which was well received by everyone. Employees who had spent a lot of time on the road on business were able to get together with their families for a special holiday, and breathe a bit of fresh air, taste some unpolluted fruits, and enjoy the pleasures of the countryside. Photo by Zhang Li.

Memorable Military-style TrainingSun Yibing, Shenyang Paraffin Chemical

The approach of autumn marks the return to campus life, but this term was special for our class, because we're junior middle school students this year. So, we

had two weeks of military-style training. I personally had no experience in this, so I'd been looking forward to this day for a long time. And, finally, here it was. The first lesson was on standing, the most essential exercise. We had to stand upright, head erect, chest out, hands stiff along the trouser line, heels tightly clamped together, and toes pointed out at about a 60-degree angle. We couldn't make even the slightest movement there, in the early September sun, which was a daunting challenge to all of us, spoon-fed kids. After several days of suffering, we learned how to follow commands such as "At ease", "Attention", "About face", "Mark time", and "Quick march" and

how to goose step properly. Our time finally came: we had to stand still and then goose-step to the teacher's command, and march toward the podium, while responding to "At ease", "Attention", "Right face", and "Mark time" at various places. That was the conclusion of military training on the parade ground. The two weeks of military-style life taught us the amount of difficulties we'd have to face before being given the green-light by the instructor. But, what we learned most from the training period was the pleasure of getting to know each other and working as a team. The bitterness and pleasure of military training were actually colorful, dreamy and beautiful because of the resilience and optimism we showed. I'll always remember the first lesson of junior middle school – the military training.

My English TeacherYu Jie, Bluestar Yima

I like my English teacher Dong Shuqin very much. She's medium-sized with curly, shoulder-length hair, two

expressive eyes, and a sweet voice. She's very attractive to everyone she meets. And not only is she beautiful, but a good teacher as well. We all really like her. In every English class, we put our English textbooks neatly on our desks in advance, and sit upright. When Dong says "Hello" to us, she passes her sweet smile from the first row to the second and then the third and she encourages interaction in class. Every time we learn some new English dialogue, she randomly selects several class members to engage in role-play up on the podium, to make us more interested in English sentences and commit it to memory. And we always volunteer and Dong always encourages us and boosts our confidence. On every occasion, the classroom air is stimulating and harmonious. Because of the onstage exercises, our English conversation abilities have constantly improved and we've become more fluent in oral English. We've not only memorized more words, but have become increasingly interested in learning English.

Recent ly, Gu i l in T i re and i t s t i r e community hosted a "Happy Babies"

parent-child activity. Infants around the age of 1 to 3, and their parents, took part in the activity. It was an interactive event for parents and children and bridged the gap between parents, children and society.