Orica Polyethylene and Kemcor Announce Merger Negotiations

27th May, 1998

Orica Limited and Kemcor announced today they are in negotiations to combine their polyethylene, polypropylene, synthetic rubber and engineering plastics operations into a new joint venture. Kemcor is a 50:50 joint venture between

Exxon Chemical Company and Mobil Chemical Company. The new venture would be formed after a period of due diligence and finalising agreements.

Orica Managing Director and Chief Executive Officer Mr Philip Weickhardt said, "This is the sort of efficiency improvement required to ensure a robust and more competitive plastics manufacturing industry."

The new venture would continue to manufacture and market all current products,primarily for the Australia and New Zealand markets. Combined sales would total A$700 million a year. The venture would initially employ around 1200 people. The merger is anticipated to provide substantial cost efficiencies and leverage manufacturing synergies. Orica is expected to have a 47% interest in the new joint venture with Exxon and Mobil each having 26.5%.

The joint venture, with proposed headquarters in Melbourne at Kemcor's Altona site, would retain all existing manufacturing facilities at its Botany, Altona, Brookvale and Laverton sites.

Mr Weickhardt commented, "The Australian polyethylene industry faces substantial competition from imported polyethylene and finished plastics products. To be world competitive, there must be a better use of existing Australian facilities and an appropriate cost structure. By combining Orica's olefines and polyethylene assets with Kemcor, we are creating a more efficient producer which has the potential to be one of the leading integrated manufacturers of polyolefins in the Asia Pacific region."

Mr Ken Robertson, Senior Vice President of Exxon Chemical, commented, "One of the strengths of the joint venture is that it would retain access to technology and technical assistance from both Mobil and Exxon." Exxon and Mobil have

proprietary strength in olefins steam cracking technology and polyethylene manufacturing. Exxon is also a 50% shareholder in Univation Technologies which develops and licenses the UnipolTM polyethylene process technology utilised by both Kemcor and Orica, as well as Super Condensed Mode and metallocene technologies.

Mr Dan Thomas, Mobil Chemical Company Vice President and General Manager, Chemicals Asia Pacific said, "The technology expertise of Kemcor and production synergies provided by fully utilising the ethylene produced at Orica's Botany facility will result in a competitive cost structure for the joint venture company. It will be able to better serve our customers by offering an unparalleled mix of high quality products and outstanding service and sales staffs."

The merger is subject to approval from the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB).

Orica (formerly ICI Australia) is an independent company with Australian and international manufacturing operations. Orica supplies and manufactures industrial and specialty chemicals, agricultural chemicals and fertilisers, explosives and mining chemicals, plastics and paints and other consumer products. Orica is headquartered in Melbourne, Australia.

Mobil Chemical is an integrated global manufacturer and marketer of basic petrochemicals, synthetic lubricant basestocks, additives for fuel and lubricants,oriented polypropylene flexible packaging film and zeolite catalysts. It is headquartered in Fairfax, Virginia, USA.

Exxon Chemical Company and affiliates manufacture and market petrochemical products in more than 100 countries. Headquartered in Houston, Texas, USA, it is the third largest petrochemical producer in the world.