The world''s largest producer of polyethylene with sales of $49 billion, Dow Chemical Company, and one of Brazil''s largest ethanol producers, Crystalsev, have announced plans for a global facility to manufacture polyethylene ethylene, the raw material required to make polyethylene, the world''s most widely-used plastic, from sugarcane.

Under the terms of a memorandum of understanding agreed by the two companies, Dow and Crystalsev will form a joint venture in Brazil to design and build the first integrated facility of its scale in the world. It is expected to start production in 2011 and will have a capacity of 350,000 metric tons.

Crystalsev commercialises products made from sugar cane through three areas: providing of services to mills; commercialisation of sugar and alcohol; and trading - purchase, resale and management of assets. The group produces 1.8 million tons of sugar, which corresponds to 8 per cent of all sugar manufactured in Brazil, and employs 30,000 people.

Crystalsev operates in several regions in the country through 13 companies that together form the second major producer of sugar cane in Brazil.

The venture will combine Dow''s leading position in polyethylene with Crystalsev''s know-how and experience in ethanol to meet the needs of Dow''s customers in Brazil and what will likely be international interest.

"We are excited to partner with a great company like Crystalsev to build the first world-scale polyethylene facility that will use a renewable feedstock," said Andrew Liveris, chairman and CEO of Dow. "This project is a prime example of how Dow''s innovation and industry leadership are creating outstanding opportunities to drive forward our strategic growth agenda in a way that fully supports our 2015 Sustainability Goals commitments."

Dow has operated in Brazil since 1956 when it established a Latin America headquarters in São Paulo and has its presence in Brazil with 21 locations, including manufacturing plants, business centers and research and development facilities. Dow has 2,100 employees in Brazil.

The new facility will use ethanol derived from sugar cane, an annually renewable resource, to produce. Ethylene is traditionally produced using either naphtha or natural gas liquids, both of which are petroleum products. It is estimated that the new process will produce significantly less CO2 compared to the traditional polyethylene manufacturing process.

"This joint venture will provide Crystalsev with an excellent opportunity to diversify its businesses through the development of value-added products made from ethanol as part of an environmentally sustainable project," said Rui Lacerda Ferraz, president of Crystalsev. "This project will bring the optimisation of synergies and the creation of new and professional growth opportunities. For such an important enterprise, we could not have found a better partner than Dow, the global leader in the polyethylene market and a company that works with state-of-the-art technology."

The companies have already begun conducting a feasibility study to assess various aspects of the project, including engineering design, location, infrastructure needs, supply chain logistics, energy and economics. The study, which is expected to take one year, will also look at the possibility of receiving approval for the project and the process as a Clean Development Mechanism (CDM). The CDM was developed by the United Nations to help companies manage their carbon credits from emerging market projects.

The areas being considered as potential sites for the new facility are currently being used for low-density cattle grazing and are not near any rain forests. Both companies have underscored their commitment to ensuring that the plant is located in a sustainable environment.

The new facility will use Dow''s proprietary solution technology to manufacture Dowlext polyethylene resins, the world''s leading linear low density polyethylene, which combines toughness and puncture resistance with high performance and processability. The material offers significant advantages in a range of different applications, including pipes, films, membranes, and food and specialty packaging.

At a molecular level, the joint venture''s product will be identical to the Dowlext polyethylene resins manufactured at other Dow facilities. The advantage of this material versus most renewable resource-based plastics is that customers will be using a drop-in replacement made with a renewable resource not a different polymer altogether. Also, like the traditional PE product, the sugar cane-based polyethylene would be fully recyclable using existing infrastructure.

Polyethylene is the most widely used of all plastics and can be found in all manner of everyday products, from food packaging, milk jugs and plastic containers to pipes and liners.