COLUMBUS, Ohio--(BUSINESS WIRE)--Hexion Specialty Chemicals, Inc., and Shanxi Sanwei Group Co., Ltd., today announced the formation of a joint venture company that will build and operate a new plant in Shanxi Province, China, to produce VeoVa™ monomer, a key building block ingredient used in water-based decorative coatings, redispersible powers and adhesives.

The joint venture, named Sanwei Hexion Chemicals Limited, will begin construction of the VeoVa monomer production facility as soon as a business license is obtained. Completion and commissioning of the plant is anticipated for the third quarter, 2011. The new plant will represent the first manufacturing capacity for VeoVa monomer in Asia and will increase global capacity for this specialty material by 30 percent. Hexion currently produces VeoVa monomer in Moerdijk, The Netherlands.

VeoVa monomer is used in water-based acrylic and vinyl coatings, redispersible powdered mortar admixtures, adhesive formulations and other applications. It has outstanding physical properties that can add resistance to alkali, water and ultraviolet light, repel water and enhance adhesion on dissimilar substrates. By improving the performance of water-based coatings in demanding applications, VeoVa monomer is enabling manufacturers to switch formulations from solvent borne systems, dramatically reducing volatile organic compound (VOC) emissions and enhancing the environmentally suitability of coating systems.

A typical application for these state-of-the-art coatings is wood coatings and stains, which historically required a solvent base in order to stand up to weather extremes, moisture and UV light. Other VeoVa monomer applications include roof tile coatings, and light-duty anti-corrosion coatings for construction and marine applications.

VeoVa monomers also are used in redispersible powders for mortar admixtures, where their advanced physical properties lead to higher quality cement mortars and adhesives, and reduced dust at construction sites. These redispersible powder systems are widely used in thermal insulation products for existing buildings as well as in new construction, helping to conserve energy usage.

“We anticipate that the global market for VeoVa monomer will continue to grow, and this new location and its additional production capacity will be vital to meeting the needs of our customers,” said Jorrit Klaus, Hexion’s Vice President, Versatics. “We believe growth will be particularly strong in Asia and the Americas, where VeoVa already is used in a wide variety of applications including concrete additives, protective roof coatings, and decorative paints.”

A leading chemical company in China, Sanwei operates a manufacturing complex in Shanxi that produces various chemicals including acetylene, a key raw material for VeoVa monomer production. Sanwei will purchase a portion of the joint-venture company’s production for its own use. Hexion will continue to be the sole global marketer of VeoVa and will use the plant’s additional capacity to serve the needs of its growing global customer base and for its own internal use.

Mr. Yang Xueying, General Manager of Sanwei Group, said: “We are very pleased to cooperate with Hexion for the construction of this VeoVa monomer production facility in Shanxi. We believe this project will have a very bright future in China. Hexion’s VeoVa monomer production process technology, combined with Sanwei’s manufacturing expertise, will enable both parties to use their combined strengths to reach a win-win situation for VeoVa monomer applications in China and for the region. This project investment is an important milestone for both of our companies.”

Hexion’s Klaus said, “We are honored to partner with Sanwei in this venture to bring Veova monomer production to Asia and to increase the global availability and supply of this specialty product. Sanwei brings extensive manufacturing expertise, key raw materials and a significant local presence to bear on this important project.”

About Hexion Specialty Chemicals, Inc.

Based in Columbus, Ohio, Hexion Specialty Chemicals is the global leader in thermoset resins. Hexion serves the global wood and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Additional information is available at www.hexion.com.

About Shanxi Sanwei Group Co., LTD.

Founded in 1970, Shanxi Sanwei Group Co, Ltd., a public company (000755 on Shenzhen Stock Exchange), is one of the major manufacturers of organic chemical products in China. It has achieved ten years of constant high growth and development through innovation, modernized chemical process control, computer-aided management and digital telecommunications, providing the company with its unique characteristics and business edge. Addition information is available at www.sxsanwei.com

Forward Looking Statements

Certain statements in this presentation are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, the management of Hexion Specialty Chemicals, Inc. (which may be referred to as “Hexion,” “we,” “us,” “our” or the “Company”) may from time to time make oral forward-looking statements. Forward looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “will” or “intend” or similar expressions. Forward-looking statements reflect our current views about future events and are based on currently available financial, economic and competitive data and on our current business plans. Actual results could vary materially depending on risks and uncertainties that may affect our markets, services, prices and other factors as discussed in our 2008 Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission (SEC). Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: economic factors such as the current credit crises and economic downturn and their related impact on liquidity and the industry sectors we serve, or an interruption in the supply of or increased pricing of raw materials; competitive factors such as pricing actions by our competitors that could affect our operating margins; and regulatory factors such as changes in governmental regulations involving our products that lead to increased manufacturing costs and environmental and legal matters as described in our 2008 Annual Report on Form 10-K and in our other reports filed with the SEC.