Document G5rOEey199k5MKEOg74K9ym9x

TO H. D. Grove Dave Shoemaker has re-evaluated the proposed process for pro ducing C2 chlorinated hydrocarbons assuming availability of HC1 from the Inorganic Divisions proposed HEDP plant. A graph showing Corporate RQI is attached. This project looks very attractive if this volume of material can be marketed at 5.5d/lb. to 6.0<?/lb. net. It is recommended that: 1. Commercial Development determine price at which this volume of material can be sold'. 2. If sale price is above 5d/lb., that arrangements be made with Inorganic Division to obtain the HC1 and process development work be started. 3. The chlorinated solvents process be offered for license through Scientific Design, as part of the VCM package, if Monsanto is not interested in commercialization. Advantages and Disadvantages of Project For this project the advantages include: 1. The market is growing and should support a new ventureof this size with normal growth over the next 3 to 5 years. 2. There are nine current U.S.' producers with relatively small plants. Most of these use high cost processes. 3. VCM will be available for purchase by Monsanto at what is thought to be a lower cost than manufacturing cost for most producers. CBY 1023151 I RSV0032621 H. D. Grove "\ -2- Jane 23, 1966 4. HC1 will be available to Monsanto at a "no value" cost. Division accounting may not show this, but Monsanto economics will. 5. We have a lead in technology. Others can be expected to develop the technology, but have not commercialized as yet. There are several disadvantages in entering the chlorinated solvents business. These include: 1. This is a large volume (1+ billion pound) market and as such should be low return on investment for estab lished producers. 2. The division will not be basic in either chlorine or VCM. 3. We do not have an established marketing system for this type product. Most of the above disadvantages will apply to essentially any product which would be considered by this Division. This means that an attractive project must have advantages which offset the disadvantages. Details Inorganic Division is planning_a new detergent intermediate plant (HEDP) which will produce 110 M lbs./yr. of by-product HC1. This project is profitable if the HC1 can be disposed of at no cost, but may not be able to support_disposal or recovery costs. In any case, there is about $1.9 M chlorine value available. Approximately 25 M lbs. of this HC1 can be used in styrene and lactic acid, leaving 85 M lbs. for other uses. Laboratory work has been done to show that oxidative chlorination of VCM can be used to produce trichloro and perchloroethylene. The amount of each produced can be controlled to some extent by changing operat ing conditions. With cheap VCM available (4<?/lb.) this gives us the potential of a flexible, low-cost process. CBY 1023L52 RSV0032622 H. D. Grove -3- June 23, 1966 The economics of a combined VCM-C2 chlorinated hydrocarbons process had been evaluated previously (my memo of February 28, 1966 to you) and was used as the basis for this evaluation. _ Capital was scaled down by the 0.6 power. An error of $1.0 M (25%) in M & E would reduce ROI by 3 to 57. There is an addi tional value of $425,000 for HC1 used in styrene and lactic acid which has not been included in this evaluation, but which must be included in the over-all evaluation. The estimated U.S. capacity for tri + perchloroethylene in 1968 is between 1 and 1.2 billion pounds. Material from the proposed plant would then represent something less than 14% of the market. The largest producer is Dow with plants operating at three loca tions. Many plants are old, relatively small (60 M lbs./yr. or less) and some still use acetylene as a raw material. Previous, economic evaluations have shown that chlorination of propane is the most economical process, but cannot compete with this pro posed process. From these evaluations it appears we have an economic advantage over any present process due to our unique technology. Price of this product is high at the present time, but a market study made in January, 1965, indicated that domestic producers received 8 to 9 cents per pound net price at their plant. Im ported material was selling at 3/4-l<?/lb. below domestic price. Thus, a sale price of 6c/lb. might be realistic for our plant if sold in bulk to a distributor. Detrex is one producer-distributor. They have recently approached Monsanto through Scientific Design for information on oxidative chlorination of a dichloroethylene-ethylene stream to produce chlorinated solvents. An arrangement with Detrex in which we produce material and they market might be profitable for both companies. At least this would be.a good starting point in de- ,, veloping distribution-volume-pricing information. Ends. (4) CBY L023L53 RSV0032623